All Forum Posts by: Bobby Mitchell

@Mike Gennaro

We not to far apart, I'm in Poplarville, MS.

I own 4.3 acres of land near my home that I am developing. Two weeks ago I purchased a 2 bed / 2 bath mobile home to start my project. I paid $14,000 cash and have about $5000 in moving and set up cost but the cash flow will pay me back in three short years. I will purchase 3 more homes, all three bedrooms, to finish off this property. When it's all said and done I will have  4 mobile homes with $2500 coming in each month with zero debt. Not bad for passive income. I will manage them myself and I can do all repairs. 

One thing I am doing since this is a long term investment is that all homes must be in A+ condition, vinyl siding, shingle roof, with all appliances and move in ready, I don't want lots of repairs to start off, so I pay a little more for quality and everything is bought with cash. I have no mortgages to pay so I can take my time and do this the way I want it.

@Bill Neves

Bill sounds like your killing it! 

I'm not too concerned about depreciation, the goal for me is cash flow. We surely couldn't get the same returns here in Mississippi as you do up there but a remodeled home sold on terms or for cash is still a profitable avenue that I will take. I can pick up homes all day long at $3k-$5k cash and within a few week have it ready to sell.  I don't have a large selection of parks in the area, most home are on 1-2 acres. I kind-of prefer these as I will have the land as an asset and I could always place another home on the same property and rent it out. 

Are you doing the work yourself or do you have a trusted crew?

@Chris Reeves

All very valid points, thank you.

@Chris Reeves

I appreciate your taking the time to evaluate my plan. We all know every market is different and the plan I outline is purely subjective, I give you that. The value of $162,000 is based on projected rents at the point of break even for me, which in this case is 4 years.

To your first point of pumping $80,000 into a depreciating asset – Thousands of investors do quite well with depreciating assets such as mobile homes and mobile home parks, yes I might do better with a property that was already established or brick and mortar but that’s an option I’ve ruled out, we are quite rural with a good growth in single family homes but to pick up a 3 bed/ 2 bath traditional home would be $50,000 - $80,000 each so in the short term (10-15 years) I get more bang for my buck in mobile homes.

It’s a college town and good school district, but Mississippi isn’t known for its wealth so mobile homes are very common and easy to rent. The market for rentals is lagging behind here also. Duplex’s and Quad’s for sale in this area are far and few, and don’t give me the per door dollars I want without having to seek out financing and I’d prefer to pay cash.

Good point on the home expense ratios, I should allocate more for repairs. However “expense ratio’s out of whack” seems a bit excessive, I’m quite capable of replacing a roof, floor, wall or window, not much more than that in a mobile home. I’m also very particular about what I will buy, as with my first purchase, it's in excellent shape and move in ready.

I know these home will lose value. This is not a 30 year plan, 10 years tops on this project and I will cash out and reinvest, so I’m in line with you on that. The value of the “park” comes from its generated income just as any other multi-family asset, so I can’t see how I lose money if I sell before homes need replacing. I have yet to see rental rates go down.

I will have a return “OF my capital” in 4 years, so I don’t see how I’m losing money there either. As rents increase, expenses should stay relatively flat, barring any catastrophes. We do have hurricanes, but with my homes insured with a “replacement cost” clause I get a brand new home if it’s blown away by a storm, so bring it on!

Chris I will use your points to look deeper as I invest into other assets. This is not my "basket of eggs", I am looking at other properties and would structure them differently. I have a simple plan because I’m a simple man and this works for me, it’s only a couple miles from my home and fills a need in the community. 

@Tommy Vise

Personally, I'd jump all over that! Don't let small and old fool you, diamonds don't come out of the ground shiny! 

I am looking to build what you have the opportunity to buy, look at my post > Cash only investing in Mobile Homes - My Plan, I posted yesterday to get an idea of what you can do. 

Sounds like the seller is motivated by age and health and I'm sure he has trouble with up keep. You are right you can raise rent or later sell the older trailer and upgrade. 

I say do it!

Andrew, (not sure how to do the @ thingy)

In 2009 I sold my 4 rentals, my personal home, my boat and motorcycle and moved to a cheaper state...MS. I took all the profits and bought my land cash, put a hefty down-payment on my current home and I live below my means, i.e. no toys, no living like the Jones's, etc. 

Last month when my friend bought a new truck for $20,000 I bought a mobile home, his will cost him $40,000 in the end, mine will make me $100,000 in my life time. Choices.

 I increased my income at the same time by taking risk in my profession, I am a Safety Consultant for the Oil & Gas and Industrial Construction Industries. I work long hours and am away from home often. So, to answer you question, I do without and increased my income. Not everyone can do that but I had the discipline and the opportunity and a great wife that puts up with it all. 

I take all 'extra' income and put it into this project, this is my retirement and hopefully I will duplicate this several more times, I want six figures before I slow down. 

There is no magic formula, I learned several great lessons with my first properties I owned and I see the value in mobile homes, cheap to buy, easy to rent. 

Set a goal and stick too it. There is good debt and bad debt, however no debt make you a free man!

Hi All,

First time posting on here but I have been an avid reader of the forums for a couple years. Great learning tool.

I invested in single family homes in Houma, Louisiana from 2006-2009 and did okay, a couple rehab/flips and a couple rentals and it was profitable; however I never like the fact that I owed someone a note, in this case the banks. I also found myself using credit cards for repairs and I never felt good about that either. In 2009 I move out of state and sold all 4 homes and haven’t been back in real estate until 2014. I just didn’t have the time.

I now live in Poplarville, Mississippi a small town with a community college. The market is not hot by any stretch of the imagination, but I have noticed a lack of rental properties and the college is growing quickly, so I'm hedging my bets on future needs. I am fortunate to have a good salary and low level of debt at this time in my life, which affords me the cash that I am using to invest in real estate, specifically mobile homes.

I formed an LLC and bought 4.3 acres of undeveloped land for about $13,000 cash last year. Due to county restrictions I can only place 4 mobile homes on this parcel, but I'm not too concerned, each home will get 1 acre giving it a more family atmosphere, which is good in my area.

Water is city but sewer is individual septic tanks. I have someone to develop dirt pads, gravel driveway, place septic’s and run power. I have quotes and all will cost me about $5000 per home.

My budget for purchasing homes is $20,000 each including the moving expense if possible, this is the top price I will pay and only vinyl siding and shingle roof will do, also it must come with central heat & a/c and appliances. The market for homes in my area is very good and prices are fair, it also helps that I am in no hurry and I have cash. This lets me wait out owners, as we all know financing on older homes is almost non-existent.

Last week I purchased the first home, a very nice 2 bed / 2 bath for $14,000 cash, $2200 to move it and $5000 to get it rent ready (water, power, septic), it will be ready in one month. Next month I have my sights set on a 3 bed / 2 bath for $18,500 cash with same expenses.

When I’m done next year at this time I will have (3) 3 bed / 2 baths and (1) 2 bed / 2 bath. Rent will be $650 for 3 beds and $550 for 2 bed. For a monthly gross of $2500.

My total investment in two years will be about $102,000 on the high end.

Breakdown of returns:

Gross rent - $30,000

Expenses - $6700

NOI - $23,000

Cash on Cash return = 23% first year

CAP Rate = 22.55

Gross Rent Multiplier = 4.4

Estimated property value upon completion of $162,000

Cash is king right? With cash purchase only upfront and no debt my long term ROI is looking pretty good!

The best part is I have all my money back in 4 years and I’m debt free!

I’m putting this out there for you guys to punch holes where you see any weakness. So am I missing something or is this a solid plan?