Maintenance Costs on Lonnie Deals and Rentals


#1

I’ve spoken to two well-respected Lonnie Dealers who are members of this community. I asked both what I might need to budget per house per year for repairs. I was surprised in that one said “$300 per house per year, maximum.” and another said “$1,200 per house per year, at least…”

Given these widely differing views on the costs associated with doing LDs, I thought I’d open it up for discussion. I’m getting into doing both LDs and regular rentals and I need to know how much to budget each year for losses due to maintenance. (My homes are mostly 1998 and newer 16x80 3/2s…)

Thank you in advance for your thoughts,

-Jefferson-


#2

Jefferson-

The amount you should budget per year is dependent upon two main variables: how well you screen your tenants (and you cannot screen out all the destructive or stupid ones) and how much work you do yourself on the home. People who do a lot of the work themselves will spend less money on repairs, but more time.

A Lonnie deal is buy and sell on a note right away, a rental is a different animal. I give buyers 30 days to find any problems with mechanical systems, which I replace or repair as needed, and after that any and all repairs become their responsibility, unless/until I get the home back.

For my Lonnie deals I budget $2000 in holding/repair costs per turnover, and am happy when it’s a lot less, which it usually is. And then I budget $0 for ongoing costs.

I don’t have experience renting MHs, just SFRs, and the repair costs per rental average $1000-$2000/yr (these are top-quality rehabs, other wise repairs would be more).

I don’t do any of my own work, so my costs are on the high end.

good luck,

Anne


#3

But on the other hand, you cannot discount your own value. Jim does the majority of the rehab on homes we buy and/or get back and resell, mostly because we cannot find someone here to do it. He does not, however, do it for free.

One of our other companies bills the work to the company that owns the home, at the rate we would pay someone else, sometimes less. (He does things faster than most of the people we have hired.) That puts the cost of the unit where it should be, and puts money in our pockets as well.

We do this with all our properties - mobile homes or SFRs.