All Forum Posts by: Chris Look

@Chris Look, are you actively looking for another deal?

 I would make sure you protect yourself by either getting a longer-term lease or somehow negotiating with the owner to not increase your rent for so much time. You need to mitigate that variable.

Is this a mobile home park community or just some random houses? What are they sitting on?

I think there is a lot of opportunity in this deal.  Mobile homes are often slept on, so there may or may not be as much competition in your local market. I know in Alabama people aren't exactly clambering to buy up all the mobile homes like I am. haha. I would love to see the numbers of this deal if you care to share them. I can also tell you some things to watch out for. I usually have a partner come along with me to do an inspection. I once crawled under a trailer while my partner turned on all the faucets to check for leaks. One of the drain pipes went directly to the ground and didn't feed into the main drain at all. At all! That was a fun discovery. It was a high shock item with a lot cost fix that helped me in the negotiations. These aren't as complicated as normal homes, so you should be able to do it without a professional inspection, minus the septic (which you shouldn't be responsible for if you are only renting the lot vs buying the land). 

@Chris Look Definitely check the rent roll and verify the rental history for these properties. Also, look at the leases to see when they're up and the history of the tenants living in there. 

Another thing to ask for are any receipts of any work done to the homes by contractors. You want to see what has been put into the home to fix them up over the years. 

Other items to look at include: heating and air conditioning, hot water heater, roof, siding, plumbing and floors. Before you proceed with the deal, it might be a good idea to have an inspection set up of the properties you're planning to buy. 

Hope that helps! 

Definitely a LOT of things to consider!

They have the potential to cash flow several times what other properties will. The upfront numbers will look GREAT!

That being said. Typically the renters you will get, might not be of the highest caliber. This can potentially increase your costs through issues like missed rents, evictions or just additional damage to the property. 

You might not be able to use the typical screening processes like Credit Checks... You will need to get Very good at Listening. By this I mean, Thoroughly checking references! Ask previous landlords Lots of questions. Understand that you might be talking to a friend or family member posing as a landlord. Be certain to ask questions that might flush this out. Do Background checks or Check the repository.

Also, as mentioned, specifically older mobile homes just weren't built from the best of materials. Thing break easily and were very often built slightly smaller than commonly used items in hardware stores. Not to mention, they LEAK EVERYWHERE! Roofs and Windows leak and Destroy walls and floors with minimal notice. Floors are made of Particle board, not plywood, so small leaks under sinks or tubs will cause significant damage.

GOOD NEWS:  While Mobile Homes take a lot of getting used to, they can be very lucrative and have a really low barrier to entry. You just need to get accustomed to them.  Learn to Seal them up! Always maintain them to a certain standard. This will help you get a better tenant and help the bottom line in general. REMEMBER, Crappy Tenants will happily rent Nice places but Good Tenants are very unlikely to rent to rent Crappy Ones! 

We came across some trailer house units to possibly purchase and long term rent. All of them are rented now and have good cash flow. Several of them are not in the best condition, so we are looking at probably purchasing only four of them that are in good condition at first. Being new to this, what should I be aware of or ask about before we purchase them? I have a breakdown of the current owners costs (lot lease, utilities, rent rates, etc.) but nothing else proving these are accurate. My concern is that I am not getting all of the information and it won't work out the way I think it will. Any advice or thoughts would be great! Thanks

@Chris Look This is definitely a question you want to get on the phone with a few different people in that world to get the best perspective. Here is a video that might help clear up some questions:
https://www.youtube.com/watch?v=NEpBed2-9HA

@Chris Look rough calc we usually see is 25-35% building basis (less land) is eligible. For 23% the law is 80% vs 100% in 22.