All Forum Posts by: Tim Olsen

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! 

@Don Spafford

Yep, they are on their own lots. That is a big part of what made the numbers work. We got the lots for around $15,000 each and then we did all the foundations and rehabs in house. We also do the moving of course.

The foundation Costs are around $6,000 We got the homes for next to nothing since they are older and in need of major rehab. But I purchase all my materials in bulk or on clearance so we are doing our rehabs for around $10,000 Then we have building permits, hookup fees and curb/gutter is around $9,000.

So, I figure around 40k all in and hopefully rents will be around $700

@Michelle Yoder

Did you end up BRRRing any manufactured homes?

I’m doing a few in South East Idaho right now. They are older but I’m putting them on foundations to make refinancing easier. It all just makes sense, Cost is low and rents are high. The cap rates should be around 20%. I found a few local banks that will loan on them. Seems like that is going to be the trickiest part.

How common are manufactured homes in your area?

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $70,000
Cash invested: $15,000

Duplex with foundation issues. Seller finance. Current rents $900 per side

What made you interested in investing in this type of deal?

Foundation issues is one of my Specialties

@Wesley Hayes

I’m currently in Idaho and most of my properties are up here but also I invest in Southern Utah. I lived there for about 8 of the last 10 years.

I recently added another Duplex to my portfolio in Cedar City. It has serious foundation issues, so I will be down there doing repairs in the next few months.

I’ve flipped several homes in the St George area. And had a few rentals over in La Verkin.

Not sure exactly how I can help from here. Perhaps when I get back down there in a few months.?. But if you have any questions, don’t hesitate to ask.

@Curtis Towers

Make sure there is plenty of money in the deal. You need enough cushion for future possibilities. And also If the soils are bad, FIX THE SEWER LINE.

When a water line breaks, foundation issues show up quickly. When a sewer line is broken it will settle slowly over time. So since November is not very long to spot an issue. There is definitely a reason they didn’t want to insure it. Do you know the reason it was replaced? Was it a full replacement or was some of it repaired?

@Joel Brown

I used Greg Walker for one of my rentals in Cedar City but he is out of St George. He does a lot of evictions and would likely know the best way to proceed.

@Lindsay Bayles

Are you checking specifically in St George?

I have owned some in La Verkin in the past and still own a few in Cedar. Some were on the MLS but that probably won't happen nowadays. The market in and around St George is VERY competitive and cap rates when you do find one are awful. Values are very inflated now and inventory is virtually non existent. Perhaps look a little further out? Maybe Fillmore? Or further south like Overton?

When I keep a house for myself I spend a lot more time with the preparations. Meaning, the point at which you separate the plumbing and heating and electrical can cost you a LOT more. There is a ton to separate and it is real easy to run through with a sledge hammer and sawzall and cut way too much. Where it was built in 2000 most of your wiring should be up to code but may need a few AFCIs and GFCIs added. Some counties/ cities will allow Certain parts or the house that are existing no to be brought up to modern code. The worst one is usually insulation. As a lot of older homes are 2by4 framing and depending what part of the country you are in may need R19 which is very difficult without removing the siding. Also, I have had some inspectors make me change windows simply because they weren’t labeled to ensure they met modern code. If plumbing is galvanized we just convert to pex. If you don’t want to hurt your shower. Just get as close as you can and put an adapter on, you will still pressure test to the shower valve. We usually separate the sewer lines so we can just add some couplers and put it right back. Take some time with the HVAC as we usually leave all the ductwork down the middle and put it right back up when we get there since it already fits the house. Most of your costs will be getting all your utilities to the house at the new location. Of course permits and excavation but also just the cost of the hookups if you are on city water and sewer+ the contractors to hook them up. We have had our electrical cost shoot up pretty high for a few reasons like maybe the transformer in the area wasn’t enough to handle another service or maybe they had to bring it over or under the street so be sure to get as firm of a number from the electrical company that you can. The best advice I can give is to remember. You have a house from 2000 not from 2018. I guess that applies to any flip but the guys that do moved houses regularly just put them back together and remember that is the house they bought so why treat it apart and haul most of it to the dump. Sounds like you finance them the way we finance them. HML and either sell or refinance. Other parts of the country may be different but we have always been able to get full value at resale. It is similar to people that buy a house with a foundation repair. Some worry and some don’t so just disclose it up front and that way you will get a serious buyer a lot faster. If you get a buyer on the fence just have them call the mover and if they are a good house mover they will have no problems letting them know the houses don’t have any structural damage. I have moved HUNDREDS of buildings and none of them have had the structure compromised. You should expect a few small cracks mostly above the doors and windows. They may even go along the support walls after it is set and level up your doors if needed. Hope this helps, let me know if I missed anything or if you have anymore questions.

Perhaps I can help. What city in Idaho is this in?