Hello,
How do you make the decision to tear down or fix a home in this situation.
- You have plenty of vacant lots to fill already
- You are signed up with the cash program and are finding used homes to bring in
- Most of the homes in your park are older 70’s and 80’s homes.
Every now and then I get a tenant run off and leave me with an old home that is borderline tear down or rehab. I hate to tear it down being I already have 1/3 of the lots in the park empty. But I also hate to pump in $5,000 - $10,000 to rehab an old home when I can use that money towards buying a used 90’s home or newer that will qualify for the cash program.
So far I have chosen to tear down the few I have inherited. Is this the right choice?
We are in the exact same situation You will never know whether you made the right choice, but you just have to do the best you can.
Old homes can be a drag on the “vibe” of the park. Or they can add a mix of “charm” if they are well maintained. It depends on your market. So does the cost of rehab, and the quality to which you rehab.
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Aside from the consideration of doing this, one other thing is that if you get a customer in a home like this, you have a customer who only owes you say10-15 k on a home as opposed to a new home who is mortgaged say 15 years. So i perceive that as less risk to your park.
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Since my park is an older park with smaller lots I do not like to lose a house that fits the lot. Rehab under a certain dollar amount would be what I would use to make that decision. I have had to pay to get something taken out for salvage and I have done a total rehab. It just depends on the house, the amount of rehab needed and the size of the lot, and your business model at this point. You may need to make those decisions on a house by house, park by park, basis. No one can really definitively answer this for you.
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Give the house the benefit of the doubt. It cost $4,000-$6,000 plus shipping to move in a new house. It costs $1500-$3000 to haul the old one to the dump. You’ve spent almost $10,000 to get a new house, before you buy the new house. If the old house can be painted / fixed up to look good, you have a good house for sale in a shorter amount of time.
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I nearly give them away but i make sure the buyer Has the skill set and monies banked to rehab it. I would try to fix the better homes myself to make money off them. I can’t move a home in for less than two thousand so i have to compare any i can buy and have delivered to a rehab cost. I’ve had decent luck getting residents who have skills to work on park homes for free Lot rent. I buy materials at habitat stores. After repair I get another Lot rented. Lot rent is my bread and butter.
Here you can pay $1000 to get a year down done.