All Forum Posts by: Dan Simpson

Update: Taxes on the lot are only $140 per year and there are no back taxes owed.

Unfortunately, it is listed as "pending" now, one day after I found it. I called the asset manager in charge of the property and he took my info down in case the sale does not go through. Turns out that he didn't even get a full price offer on it.

I know this was a sweet deal and an easy way to make a few grand :(

Thanks Simon for the response. I'll find out about the taxes soon. 

If I'm buying the lot for a grand then I can afford to pay taxes on it for a year or two. Taxes are very low in that area. I don't know specifically what they are though or even know if it's lower because there is no house on the property. I assume it would be which makes it even more affordable.

I don't have any interest in rebuilding and selling although I do have the means to do so if I wanted to. If I lived closer then maybe I'd think about it. 

The 9k lot has been on the market for about 75 days. I suspect that lot sales pick up as the warmer weather approaches.

I stumbled upon a residential lot for sale by an REO company for dirt cheap ($1,500). The lot is on a subdivision street, houses built 6 or so years ago and is about 0.30 acres. The houses are all built and are valued in the 80-100k range and therefore the lot has all infrastructure available.

Why is it for sale so cheap?

I did some super sleuth work and discovered that there have been 3 houses burned down in the last two years on that street which consists of about 25-30 houses. The houses were empty at the time and someone went in and torched them when they became empty at different times for whatever reason. This is in a rural town of 2000 people in Arkansas with very little crime and the street is nice for the area so it's not like it's a bad neighborhood or anything. But it understandably has people spooked in the area. 

Anyway, this lot is one of the three that used to have a house on it. Now there is nothing but a concrete slab where the house used to be. All the houses on the street are slab houses, common for the area due to the terrain. One of the other lots is for sale for $9k with a realtor so I'm thinking that if I could get this lot for a grand, it'd be hard to lose. Especially if the arsonist gets caught and arrested, if they haven't been already. I could make a quick and easy 6-8k or more on this lot or at least hang onto it till this all blows over. 

So here are my questions... does the fact that the lot has a slab on it already enhance or impede the value of the lot? Seems like the house could be rebuilt with the same floor plan or maybe pour additional concrete if it were to be larger than the original.

Could there be back taxes or other liens that come with the lot? Like I said, this is an REO company located in another state that is selling the lot. They may or may not know these things.

The lot is about four hours from where I live but I'm thinking that I wouldn't need to go down there more than one time if at all to pull this off.

It could be a sweet deal but I also want to make sure I cover any of the risks involved since I've never bought a residential lot before.

Thanks in advance for your responses!

Cynthia,

Sure, I would love to see what formula to use on this. There are some spreadsheets out there but not really sure which one to use.

Thanks!

J Beard,

Maybe take a snapshot of it and post it here? Or you can send it to me over PM

Thanks

Rich,

Yes, tenants pay all utilities. I will pay the trash fee which is around $15 per month

I haven't looked at it yet but I'm told that the roof is around 5 yrs old and that the duplex is kept in immaculate shape. I'll find that out for myself very soon though, as well as the condition of the HVAC. It was built close to 1990 I believe.

We don't get much snow here but I will need to nail down the average cost. Thanks for bringing that up, hadn't even thought about it. I could get my butt sued if I don't provide snow removal...

Landscaping would run $40 per month, we mow 7-8 months out of the year here in MO

It would be my only duplex or rental property (I do have a house but plan on lease-optioning that and give the tenant the maintenance responsibilities) so I plan on doing my own management, but figure in $100 (5% for management) and another $160 (8% of $2,000 income) for Capex.

Not a ton of cash flow, but the attractions are the terms (getting in with 10% down) and the potential income down the road with a refinance and some equity pay-down. Plus I think it is underpriced. Based on the rental numbers, it should be selling for closer to $250k, in this area.

In my area is a walkout basement duplex for rent. Each side has approximately 2,200 square feet and 3 or 4 bedrooms. The duplex is in good shape and in a good convenient neighborhood. Market rent for each side is  $1,000 per month.

The owner is selling it on terms for $198,500. He wants 10% down with him carrying the rest at 4.5 interest, amortized for 18 years. After 5 years, the seller can refinance, as he will charge a pre-payment penalty if someone refinances before that. He wants retirement money... Anyway, the total payment per month with taxes and insurance would be around $1,450. 

I was thinking of living in one side of it eventually and renting the other side out, but for now, there are tenants in place. One is moving out in January. 

My thinking is that this might be a really good deal. Similar duplexes in my area selling for around $200k only rent out for a total of $1,400 - $1,600 per month, and he's only wanting 10% down. Even with the lower down payment and the 18 year amortization it still cash flows, and if I refinance after 5 years into a 30 yr mortgage, that's even more cash flow. 

Apologies if I'm leaving out any details, but ooking for opinions on this deal. Thanks in advance!

Thanks for the replies Al.

I've already talked to the park owners and I know that the home can stay in the park, and I know that I can sell it with owner financing. So that's not an issue.

The issue is the Frank-Dodd SAFE Act. Can I legally sell this home owner financed? This isn't a rent to own or any kind of installment sale. It sounds like from your replies that you believe it to be legal. But I've read that one might need the services of a licensed loan originator to legally sell a home - mobile or not - with owner financing. So I guess that's what I am getting at. This would be a "Lonnie Deal"if I sold owner financing and everything I've read indicates that we can't do Lonnie Deals any more

Thanks

I bought a fairly nice MH today in one of the nicer parks in my area for $3,500. My exit strategy was originally going to be selling with owner financing, something like sell for $9,000, get $500 down payment and finance the rest for about $250 a month over 42 months.

But I've been researching this whole Frank-Dodd act and I still can't get a clear answer on whether this is legal or not. I'm in Missouri, which allows up to 4 of these deals before someone is considered a 'dealer', so I'm okay there, but the gist of the posts I have read seems to be that I am NOT okay selling this with owner financing.

My other exit strategy would be to simply sell for $9,000 cash and offer to pay up to $1500 for someone to move it to their land or where ever, since the lady I bought it from said that she had a lot of people interested in buying it but then could not afford to move it. But this might take longer than selling with owner financing.

So does anyone have an alternative way to profit here? I'm very confident I'll do fine on this deal, worst comes to worst I can sell it for $5,000 or $6,000 cash but I'd like to maximize the profits while at the same time staying legal.

I am not allowed to rent the place out in this particular MHP, not that I'd want to anyway.

Thanks in advance.

Thanks for your reply. Based on my due diligence and looking at what other houses in similar neighborhoods are renting for, and considering the ideal location and proximity to good schools and the best shopping are in town, that's the figure I arrived at.

Hoping for a cash sale and flipping it at 150k seems a little risky to me. I'd have to put a lot more work into the house to make it worth buying at 150k without terms.