I’m closing next month on a small deal. It’s one mobile home rented out and two additional spots rented out. It’s in the city limits, public water, public sewer. Grandfathered in as a 'non-conforming" property. Two spots rent for $175 each and then the home that comes with the purchase rents for $500. Total gross monthly income of $850. Purchase price of $46k. Taxes are $1,253 annually and the water runs about $150 to $200 monthly. I’m thinking a cap rate of around 15? I’d love to hear input on whether I made a good deal. I will say that land values in this area are increasing.
All that said my questions are really about insurance. What type of policy do I need? I’m thinking about all that could happen. A tree falls on one of the tenants homes, am I responsible? Should I require that they have some policy of their own? Personal Injury? Looking for some guidance here. Thanks in advance!
General liability, property and liability on the home you are renting out. Some require tenants to carry insurance on their home, not sure how diligent they are about verifying / tracking.
Its a limited size so many might not buy it , might make sense as an add on for stuff locally. Hope with those water prices you aren’t paying for it. ’
Whats market rent?
Whats the value of the home if you sell it? Financing component or cash deal?
Market rents are over $200 so I think I can squeeze a little more out of rents after closing and evaluate the property. I’m not sure of the value of just the one mobile. Not a lot. Maybe 5k? It’s a cash deal.
Yes, you will have to trim the trees, do all landscaping, and also fix the water leaks, repair the roads, and take care of all the POH repairs. You will be fortunate to make this into a 5% cap rate property netting you $2,300 annually after all your expenses. IMO.
What are POH repairs? Not familiar with the term.
No roads to repair. Just 3 driveways off city streets.
POH=Park Owned Homes. Brandon was referring to the repairs you’ll be responsible for on the homes you’ll own.
You will want liability insurance on the home and lots (protects you if someone is hurt onyour property due to your alleged negligence), and likely property coverage on the manufactured home. It’s likely most economical with this size property to purchase coverage on a non-commercial basis.
Liability insurance should only be $200 to $300 for a $500k limit and the property coverage on the home will be from 1 to 2% of it’s insured value depending on where you live. Ex. $30,000 value than $300 to $600 (more if this is near the Atlantic or Gulf coasts).
A local agent can likely help, but we’d be glad to do this for you too. Mobile Insurance 800-458-4320, ext. 115 -Kala Kilgore.
Thanks for your input Kurt!