Property with Rental homes

mobile home university
1

I live in the Orlando area and was approached at the gym today by a realtor friend of mine that is listing some land with 3 mobile homes on it. There are two single wides that are rented for about $400 each and a double-wide that the owner is living in. Because I was furiously pumping on the ellipitical, I didn’t get all the details and haven’t had time to call him to get more details but wanted to get everyone’s opinion on a couple of things since I have never bought any real estate before except my own homes.

First, is this a normally a good investment, meaning owning a piece of land with three mobile homes on it?

Second, other than the typical things about a mobile home that are described in Lonnie’s books, what should I look for in the property to determine if it’s something I want to pursue. BTW, it is listed for $149K.

Thanks everyone!

Larry

Post Edited (01-10-08 01:54)

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model. I love to buy a property and add another mobile or two for added income. The land is already paid for and adding homes is cheaper than individual lots for each unit.

In my market, singles would rent for 600-650 and a double for 800-900 per month. Using the lower numbers, you will have 2K pr month in income or 22K per year (I use 11 rent months for a year for rentals).

At 125K (what I would offer) ALL financed my payment pricipal and interest would be 875 per month (7.5% @ 30 years). add 500 per month insurance and property taxes and you have an approximate monthly payment of 1375(PITI) X 12=$16,500 for a NOI figure of $5500. Put another way my 125K would be earning me 5.5K annually or about 4.5%…about the same as a CD.

this seems very skinny for me.

If you were able to get this same NOI figure on owner financed property of say 12,500 down (10% down with 7.5% annual interest), this 12,500 would still earn you 5.5K in income or 44%.

So for my 2 cents, unless the Owners are willing to extend killer terms, I would pass.

This is strictly for my model. If you were planning to live in the doublewide, this would basically pay your payment and a portion of your taxes and insurance for the year. Move into a singlewide and you would basically live payment free…

Something Tony and Scott do with great success, is start the process with the money you want to clear each year for your risk, time, and efforts and work these numbers backwards to come up with a realistic sales price…as Chris points out so well in her post below, it is all about buying at the right price.

It all depends on what you want this property to do for you…

I had to use my area for taxes and insurance…yours may vary greatly from marion county.

Good Luck,

Greg

352.216.2020

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“(I use 11 rent months for a year for rentals).”

Greg - is that to account for vacany or…?

J

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In five years of landlording we average 8% vacancy. It could be less. By the time we know of a vacancy, it is 2-5 weeks before we can break loose a crew to muck out, paint, re-key,repair, carpet, final clean. Usually only takes a day or two of labor, but we are short on staff…always.

Every owner I know is looking for honest, skilled, dependable workers. We pay our peeps 15-20 per hour, but we only have X amount of folks and 50 hours in our work week. If we could get right on these rentals we feel we can minimize this number…maybe significantly.

Greg