Hi Matthew,
Great job being proactive and looking into this opportunity in the first place.
Chris, Jason, and Curt all give great advice above.
Most parks around the country will not allow renters inside of the mobile homes within their community. Most parks do want owner occupants to reside inside of the homes, versus renters. That said some park certainly do allow renters as well as owner occupants. Usually parks around military bases will allow renting more frequently than in other areas.
With regards to your questions about creative ways to get around the ability to not rent in the community, this is something we should try to address without being sneaky. I like your idea above with regards to the 10% extra management fee however in my experience this has a very very small likelihood of changing the PMs mind. Perhaps with a newer PM or a PM that wants extra money under the table, while I don’t think it is likely I do encourage you to ask out of curiosity and experience. Even then it would probably still not be wise to move forward if the park has a policy for no rentals.
Another strategy may be to talk directly with the park manager or owner to mention that you will pay an extra $100+ per month for the ability to rent out the mobile homes for a while. You will also put down a higher than usual deposit if that makes a park feel more comfortable.
Again, these are two strategies however I do not believe that they will work to convince the park to accept rentals. A park usually has its mind made up.
I regret being a wet blanket however it is certainly good that you are looking around for deals and opportunities. Keep asking questions and pursuing different avenues. If you have any follow-up questions never hesitate to reach back out anytime. All the best.
Talk soon, John
Hi Gary,
First things first, great job being proactive enough to evaluate this opportunity and be considering this potential opportunity in the first place.
Ryan, Matt, and Dennis bring up good points and give great advice above.
Let's discuss some things we know. If the property is in a high demand area around the Orlando Metro market then you should have no problem keeping this property filled with renters or tenant-buyers. I'm unsure of the exact location, age, or condition however four modular homes and a half acre of land may or may not be valued at around $300,000. Perhaps the seller is willing to consider financing because this property will be extremely difficult for bank approval or finding proper comps to support the price. Maybe this is a retail priced property on the MLS.
Keep in mind that renters can damage a manufactured home, modular home, or mobile home pretty quickly if they’re not taking care of things. I would encourage you to inspect these properties quarterly if possible. Even then expect yearly expenses to keep up with these rentals.
I am curious what your end goal for this property is? Are you planning on holding this for a few years and intending to flip it for a profit? Or is this going to be a long-term buy-and-hold investment for the next 30 years? Keep in mind that these homes will depreciate and you will most likely have to replace them with newer models in the future at a good cost.
This certainly looks like it will be a profitable deal over time, however is that the best use of your $60,000, time, and credit? In my experience you will likely be able to purchase more than four separate mobile homes on four separate parcels of property for under $300,000 around your local area.
With all that said I certainly do not want to be a wet blanket. This is obviously an opportunity however if others have not jumped on it perhaps it is not the best deal out there. Perhaps you could negotiate the price down a bit or better terms. Let us know what you decide and keep us posted please. If you decide to move forward keep us in the loop and never hesitate to ask more questions. Keep up the good work. All the best.
Talk soon, John
Hi Braden,
Good advice from Jason and Anthony above. Please see my thoughts below in bold with regards to your questions.
After hunting and hunting for a deal and calling tons of different mobile home parks and figuring out what their lot rent is etc., I've finally found a really good deal that doesn't need too much rehab! First things first, congratulations on this tentative property! Seriously great job with regards to being proactive and patient to find this opportunity. Moving forward you will certainly fine-tuning your numbers and be able to help more and more sellers and buyers. This is the first of many mobile homes for you! However as an old mentor of mine used to say, it is not closed until it is closed.
Now I've come to the incredibly knowledgeable BP forums to help me with my next step, which I really have no clue how to proceed. This made me chuckle a little bit. Ideally it is good to have your forward plan and exit strategy clearly outlined in your mind and much of the step-by-step process you will take. With that said I admire your ready fire aim actionable mindset. What are the watch outs for when buying a mobile home trailer? Definitely make sure that you know what you are buying and test everything inside possible. Make sure you clearly know what repairs you will make before reselling or renting this property. Also make sure you understand the location in the park management as well as their application process moving forward. There are of course other things to look for but this is a good start. I've heard things mentioned in general like back taxes, owed lot rent, owed utility bills etc but what do I need to check on for my due diligence? Yes, you ideally want to make sure you know about all of these things. If there are back taxes or fees do it is not a dealbreaker however this money will likely come out of the sellers profit. Do I just get the title and have them sign it and I go to the DMV and then I'm good? This depends on your state or where you will be investing. In Indiana you'll want to reach out to the local county treasurer's office and local bureau of motor vehicles for more info and help transferring titles. I'm going to rehab and flip, do I need property insurance or pay property taxes? The answer, like most things in real estate, is “it depends”. Insurance inside of mobile home parks is not commonly required by the community but may be wise. However you will likely pay some sort of taxes or registration fees if you transfer the home into your control.
Also things to inspect on the trailer? I've learned some great things from @John Fedro 's podcasts but would love input on this as well. Thanks for following along. I do hope that these podcasts have been somewhat helpful to you thus far. I put out a couple YouTube videos as well that may be helpful.
Thanks in advance! Very excited to finally take action and not just read/listen all day but want to make sure I'm minimizing as much risk as possible! Keep up the great work. Keep us posted moving forward.
Talk soon, John
Hi Daniel.
Thanks for the shout out Curt Smith. Happy to help when possible.
Curt’s advice is certainly spot on.
First things first, congratulations for getting this mobile home under contract! I have no doubt that this may have been a bit nerve-racking for you if this is one of the first properties that you’re putting under contract to purchase. With that said now it is time to quickly and potentially get this property sold to an interested buyer for a win-win price.
Keep in mind that the state of California will want you to be a mobile home dealer, retailer, broker, or real estate agent if you plan on making a profit with a mobile home, even in a park. The mobile home park will likely not care however technically state law does ask for this. I mention this because I do not want you to do something unlawful that you do not know about. With that said there are certainly people purchasing and reselling and wholesaling mobile homes across the state with and without the appropriate licenses, ethics, and/or knowledge. I hope that this part makes sense.
You are certainly in a unique area of the country and if the buying demand for seniors in this area is high then by all means you may find a buyer that will quickly want to purchase the home for all-cash or potentially bank financing. Ideally you should already know the demand and price you will sell this property for. Keep in mind that you will have to bridge a limited relationship with the park manager and let them know that you are a family friend helping the seller to sell the property. This is for a handful of reasons, one being because it is good to find out the restrictions and qualifications of the park to help prescreen potential buyers before they go through the home or to the park office.
Typically either the seller or buyer will know how much you will make in many situations with regards to wholesaling the home inside of a pre-existing community. In my experience it is typically the seller that knows the fee or amount you’ll be getting paid. With that said you can keep the amount you make private if the seller pre-signs all of the selling paperwork and hands over the title to you prior to closing. This way you can close with the new buyers and take their money to pay the seller. In your state you may or may not choose to open escrow for this closing.
Keep in mind that it is not a good idea to string along a seller or let them believe that you are buying the home when you are really not purchasing it. Advertise and market this home like crazy and if you cannot find an interested approved buyer in two weeks of time than you may want to back out of the deal.
I hope this all helps and starts to point you in the right direction. Keep up the good work! As always, if you have any follow-up questions or concerns never hesitate to write back and were all here to help you.
Talk soon,
John
Mobile Home Title Transfer 50 States (Personal Property/Inside parks)
Hi all,
Hope everyone reading this is doing great and staying productive.
Over the past number of years I make it a point to reach out yearly to each state's manufactured housing division or title transfer bureau to double-check I'm familiar with the local laws and title procedures.
I hope the information below is helpful to some folks here too.
Disclaimer: Please keep in mind that the steps below are the minimal steps required to transfer a mobile home title in your state. The pages below do not discuss additional forms investors may want to include such as; disclosures, agreements after closing, personal property agreements, MLO paperwork, transfer documents, trust agreements, buyer/seller repair contracts, lien paperwork, closing checklists, addendums, seller brochures, power of attorneys, or additional title work needed, etc.
(The links above take you off this site.)
Hope you find this info useful and helpful. Remember to keep asking your questions and getting answers.
Please report any corrections and questions below.
Love what you do daily,
John Fedro
Hi Sharnice,
Thank you for reaching out and connecting. Additionally, you ask a good question about the turnaround for profit. I can definitely say that the answer is, "it depends". It looks like that you may be investing in or outside of Chicago. You certainly have hundreds of mobile home communities within a 50 mile radius of your location. In some of these areas you can sell homes for six figures to a bank financed buyer, and other parks that is far from reality. I mention this because your answer for turnaround on profit depends on your entrance strategy, exit strategy, repairs needed, park criteria, age of the home, number of bedrooms, and much more. I've made a YT video fairly recently that talks about the profit to be expected depending on a number of factors. Feel free to private message me if you are unable to find it.
If you are brand-new and starting with a limited amount of capital please know it is very easy to do a bad deal or overspend when it is not needed. For this reason definitely keep us posted and ask questions or deal reviews if needed. We are all happy to help when possible. This time of the year you may wish to try to double or triple your invested capital by selling for cash.
With all that said it definitely comes down to first acquiring an attractive and affordable mobile home. From there you can perform your due diligence and figure out strategies moving forward based on the home, seller, park etc. I apologize this answer is a bit vague however there are definitely a lot of scenarios on how each particular home could pan out. Additionally you always want to make sure your procedures and paperwork are legal and in order as well. Again, any follow-up questions or concerns you have never hesitate to reach out any time. Were all happy to help.
Talk soon,
John
Hi Eric,
Great job of trying to think outside the box. In my experience most mobile home parks will want a person with passable credit (or better) and a safe background to become approved at the park and also sign the parks rules and regulations and lease agreement. In my experience the park would not let a corporation on the lease alone. However stranger things certainly have happened.
Additionally, if the sale goes in default and the park has to evict the resident, they may also evict the home as well. This means that if you do not remove the home or bring the rent current than the park will soon own the mobile home. Unless of course you remove the home from the land, in which case you'd probably have to bring the lot rent current anyway. In reality we want to be helpful to a park and want to make the managers life easier, not more difficult. We want to make sure that the lot rent gets paid rain or shine whether we are paid by our tenant-buyers. If there is an eviction that has to be done we are the ones that want to handle it, and not necessarily the park. I hope this helps and make sense.
In short you should definitely do your due diligence before purchasing any mobile homes and make sure there is ample profit in value in it to create moving forward. I hope this helps and starts to point you in the right direction. As always if you have any follow-up questions or concerns never hesitate to write them back and we'll all be happy to help when possible. Keep up the good work.
Talk soon,
John
Hi Elvin Altagracia,
Thank you for reaching out and connecting. I just wanted to chime in since I saw my name being mentioned. I'm not here to give any feedback about myself, however I do believe other people have posted similar questions on different threads here on biggerpockets. You may want to check out those. With that said, never feel pressured or rushed into making any decision that will impact your life in a fairly significant way. Any new business or serious skill you learn should be move forward with based on logic, and not emotion. Please know that I'm always here and happy to help answer any mobile home related questions whether you are a member of this mentoring/training, or not. Additionally, there are a number of hard-working and active investors on this website (biggerpockets) that will absolutely give you some great feedback and advice on deals as well. Lastly, your area of Jacksonville is obviously a very decent area for this type of investing. However please do make sure you understand this business and the steps you will be taking moving forward before making any purchase offers or purchasing a used mobile home locally. I hope all this helps and makes a bit of sense. In short, definitely don't slow down moving forward. If there is any confusion make sure you get your questions answered by almost any means necessary and continue to move forward safely and profitably. With that said never hesitate to reach out and ask anymore questions to me personally or here on the forms for everyone to help as well. All the best.
Talk soon,
John
Hi Meghan,
Great work being so proactive to get out and introduce yourself to local park managers. This manager certainly seems proactive about selling his community. I encourage you to obviously remain calm and rational throughout the entire process. With that said keep up the great work to continue meeting additional park managers in the local and not-so-local area. Whether you buy this park or not these other park managers can certainly prove themselves to be useful.
From looking over your profile it does not look like you have invested in many mobile homes or mobile home communities as of yet. I mention this because a more seasoned investor would understand what questions to ask before any offers were made. With that said this is definitely something that can be learned if you have the ambition, and it sounds like you do. I would first encourage you to understand what financial questions you will be asking of the seller when you meet together. Keep in mind that there will not usually be just one meeting, there will be many meetings moving forward.
When you do meet with the seller do your best to be yourself, build rapport, and really get to know the seller and vice versa. I find it best to talk about the park for a while and how they came to own/create it. This may help lead some sellers to personal stories and outlining what is important to them moving forward in the next chapters of their lives. Building this rapport and really understanding the seller's situation may be a very valuable way to create a purchase offer that entices the seller to consider seller held financing in the near future. Depending on the sellers use of the proceeds, collecting payments over many years would certainly offset his tax burden on the property. Plus pay the seller a better interest rate than a typical bank. On the other hand, if the area is popular and the park is placed on the market there may be a number of buyers interested in paying cash for the entire community.
However first things first, I encourage you to continue becoming a mobile home investing and mobile home park investing sponge... Learn everything you can. Definitely go through this website and ask as many questions as possible to get your answers and perhaps even post specific deal questions. There is a great deal of knowledge and giving folks on this site. I hope this all starts to help and points you in the right direction. Definitely please keep us posted moving forward. As always, any questions you have never hesitate to comment back.
Talk soon,
John
Hi Tori Prophet,
First things first, great work on being interested in real estate enough to learn more, check out some deals, and asked some questions. Many investors never get to this point.
I think it is a fairly common trait for newer investors to very very very thoroughly look over almost any real estate opportunity that comes across their desk to verify if there is money to be made in the deal. I personally remember saying to myself, "if there is even $500 to be made in this deal, I want to make it." In my opinion, this was definitely the wrong mentality to have as a newer MH investor. I have learned that with mobile homes, we want to aim for a significant profit with a good bit of wiggle room in the deal to account for mistakes we may make. I hope this paragraph make sense.
Now onto your questions. Please see my thoughts below in bold.
My question is, is there a deal in here somewhere? The answer is, "it depends". It depends on your definition of the deal, it also depends on how flexible the seller is willing to be with regards to price and terms. This also depends on if you are willing to accept a very skinny deal or you would like to hold off or something more significant. What's a good offer? The answer is very much, "it depends". It depends if you will be paying cash, bank financing, trading, owner financing, or something else. I used the BP rental property calculator and the numbers just don't work. Understood and agreed. This definitely lets you know that you will likely have to make a much more conservative offer than what the seller is asking. This seems like a lot of money with no way to make all my money back in a short amount of time like with mobile home parks. So does that mean you would treat it like a traditional home? Yes and no. Mobile homes attached to private land are definitely more akin to traditional single-family home transactions than they are to mobile homes inside parks. However the properties are still mobile homes and will experience the same repairs needed, stigmas, and financing problems as any other mobile home typically would. Would you do a direct mail campaign to this neighborhood? Again, the answer is definitely "it depends". With that said I probably would to test the area. Would you avoid ones that are business-owned and just target individuals? Most of the properties I have purchased and owned are directly from the owner occupants who are living inside of the home. You may occasionally get deals from burned-out landlords and some investment companies that are looking to get rid of their mobile homes, however normally these companies wish to make a profit as well.
I filled out the interest form and 2 realtors have already left me messages. Should I talk to them, what do I say? Is this worth pursuing? This opportunity may not be worth pursuing however certainly letting realtors know who you are and what you're looking for can be a decent idea. Let them know where you are looking to buy, how you would like to purchase homes, number of rooms, and what your budget is? The agent will want to know more however this will be a good start. Remember to not feel overwhelmed and simply to answer questions honestly. With that said, definitely make sure to continue asking mobile home related questions and getting advice. This is certainly a good way to learn without losing money.
What ARE the guidelines for investing in a manufactured home on land in a subdivision and not in a mobile home park? This question could be talked about for hours or days. The guidelines will absolutely differ depending on the home, the condition, the area, the age, the sellers motivation, the market, the time of the year, the amount of land, existing financing on the property, your exit strategy, and much much more. I hope this answer doesn't come across vague or curt. However I certainly do not want to sabotage your business in any way by telling you something that was not necessarily true or misleading. Typically I make sure to buy low and sell high for most properties. However with some properties you can certainly buy high and also sell not-so-high as well and still make a significant profit. Concerning the original opportunity above, I think there are other more motivated sellers in the market that need to be found. These sellers may be local or they may be a drive away. However really knowing what you are looking for (based on your ideal enterance and exit strategies) and making offers to many many sellers will start your active deal making process. I hope this all helps and starts to make sense and point you in the right direction. As always if you ever have any follow-up questions or concerns please never hesitate to reach out to us here at BP and we are all happy to give you what insights and help we can.
Talk soon,
John