I am looking at a park with about 5 vacant late 80’s homes. What is the max in repairs I would put into these before scrapping them? The park is not very impressive looking so I do not think moving new homes in with a bunch of old ones would make the park that much better.
All need underbelly insulation. However they were all lived in the past year.
@toben In the last monthly newsletter Frank said they spend $4k on the renovations but they have system and they know how to do things. When I was flipping mobile homes in 2013 (I was complete newbie), we were spending around $6-8k for complete mobile home renovation.
Sounds about right. It is very hard to get the average down because a lot of things come in large-price “units” such as bathtub, window, door, HVAC, water heater, range, refrigerator, and these are in disrepair a certain percentage of the time. One person can paint maybe two rooms per day, and everything prior to painting takes time too. If the floor is soft, you’ll have to repair that. By the time you’re finished, you could be into it for $10k or more. However, a new home costs about $40k all-in (maybe you can get a little cheaper, but not much after installation &c). So there is a big delta between [new home @ $40k] and [used home @ $20k (includes some profit for you or maybe you budget $5k for purchase & $5k moving/installing).
The “homes” side of the business is the dirty little secret that no-one talks about. It is very expensive to fill your park if your residents aren’t going to do it for you (by coming in fully financed with their own home, for example).
Whether you run a rental model or a sales model, people want to pay over time and you are out all the cash up front. That’s a tough business, especially if you don’t have a good “pump” and a good “filter.”
This is the formula my thinking has evolved to:
Max you would pay out to get a home in your park,+ What you think you could sell it for, = Max you can spend on it.
Bring in a home can be expensive. I would fill all of my lots at a $5k loss in a heartbeat. In my markets I can get $10 - $15k for a nice modern renovated 80’s home (with me carrying the paper – yes, yes, I know all about the Smart Act.) That mean I could go as high as $20k, which is a lot more then it should cost to work over a home already in the park. A home would have to be really, really bad before I call the junk man.
The question when would you intend to sell the property needs consideration.
If you keep the ?? property 10 years will it be a park that would invite a lot of investors or would the 80’’ home been a deal breaker. When looking at a property one of the first considerations is how it will sell again. .How can we add value for a great return. A great location, nice neighbor, great schools, good occupancy (+85%) WITHOUT RENTAL HOMES since the labor involved and cost to rehab and keep rental homes nice is a chore plus the condition of our rentals show our level of commit to have a safe, outstanding value for residents. We will not normally buy a park we would not live in. Presently used homes MH’s are expensive but so is renting.