Ok, I'll chime in on this one. Personally, I think you need to subtract the demo costs from the cost of the land since that is money that has to be spent to make it usable. Think high when you go back to him with this number.
You will need to get some quotes to break it up and put it in a roll-off. I wouldn't be surprised if it's a couple grand or more. A couple pulls on a roll-off will probably run you another grand or so after delivery and pick-up. Your best bet would be to find someone that wants to scrap it and will either do it in place or haul it off (preferable).
Speaking of moving, to move in a set-up a new one you are probably looking at $3-4k turn key for a single-wide. You can buy used mobile homes pretty cheap if you do some work. Contact any local dealerships as they get leads on trades and people that just want to sell all the time. You can almost double the cost for a double-wide.
The other problem you have is that the septic system is small if what he told you is true. Ideally, you want to put at least a 3 bedroom on the lot. They are much more desirable (easier to rent).
I wouldn't put too much weight on the septic, grading, and the driveway. First, you don't know if the septic is in working order. It might have to be dug up and have a new field put in for all we know (don't forget this as it can be costly). As for the driveway, this should be included in the tax appraisal. Is it asphalt or concrete? If it's gravel, then it's definitely a non-issue.
As was already mentioned, due diligence will need to be done to make sure you are buying it right. I would try to find some comps. The deal is definitely more attractive if he's willing to finance it. Also keep in mind the money that will need to be put into the property before it will begin to generate any cashflow. Run the numbers and make sure they work. You will need cash to make the improvements including buying the new mobile home. You'll need a mover, electrician, hvac, plumber, and carpenter. There may also be some permits, fees, and inspections. It can get costly quick. ALSO, make sure you can move another mobile home in. I ran into a city ordinance a while back that wouldn't allow new mobile homes to be moved inside the city limits. You never know when things change.
I recently went through something similar to this on an old house that needed to be torn down. It just wasn't feasible. I would have had to get the lot and existing house for basically free.
One more thing to keep in mind, do NOT do skinny deals. Its a good way to lose money. Nothing ever goes as planned especially in construction. Some of the guys on here will tell you to double your estimates. That's your call but definitely pad them and make sure you have your bases covered. If you get something done for cheaper, that's money in your pocket.
Sorry for the long-winded post. I think I covered most of the bases.
Good Luck!
