Newbie question: Do I have A Deal?

I’m new to mobile home investing and need help evaluating a deal. I have a motivated seller who needs to sell before the 1st of next month.

He got this on a trade and has been paying $550 / mo park rent for two months and wants to dump it before having to make a 3rd payment. He wants to get $1,000 to cover his two payments. Here are the facts:

Size: 2bd 1 /ba

Price: $1,000

Yr Blt: 1974

Condition: Move-in ready. One one of the two a/c units serviced. Has an addition. All appliances (w/d, stove, dishwshr), No Fridge

Lot Rent: $555/mo

Community: Senior (55+), but they’ll sell / rent to 35+, plenty of amenities

Comps: 2-3 Other Units for sale at the $5k price point.

Rents in the area: $750 / mo (according to owner)

How would I structure / market this for a quick exit and few thousand in profit? I’m thinking about trying to negotiate him down to $550, paying the $555 lot rent on the 1st (total $1155) and trying to sell it quick for maybe $4,000 before the next lot rent is due.

I’m going by there to take a look at it this evening. Any help would be greatly appreciated!!

Post Edited (09-20-11 20:47)

Greg,

A couple of key points you need to plan out which is more important than what you can potentially make on this deal. On the basics yes it looks like you should be able to at least double your money. But you need to think of risk mitigation first.

  1. Do you have any agreement (in writing) with the park that if you buy the trailer, then:

1a) They wont charge you lot run until you sell it to an approved tenant

1b) You can rent in that park? Many parks do not allows rentals. What are the park stipulations for this

1c) You can put a non 55+ in there – this part seems very odd to me if they are a true senior community; I thought there were strict violations

  1. Why hasn’t this person been able to rent during the past two months? If its an easy flip or rental I am surprised he let himself get charged with 2 months rent. I know that if I allowed renters in my park I’d have a line out the office.

  2. Comps - Others are selling for around 5k but are not sold - in the same park I presume? Is there a reason for this? Have you done a quick test ad to check real demand there

  3. Talk to neighbors when you are there – find out about the place and management

  4. Talk to owners selling the other homes - why havent they sold or rented?

  5. I dont know AZ laws but check at some point what the rules are; do you need a dealers license to buy/sell MHs

My biggest concern is 1. Remember that the park holds all the keys to this. If you do not have an agreement in place you can have your place all ready with a buyer or renter but the park can reject them and keep you responsible. I dont believe in that but there are many mgrs/owners who will.

Again, it looks like it may be a good deal, but also be careful and dont get emotionally tied to it. I live in Northern CA and there are gorgeous mobile homes in some senior communities that the people want to give away. Sounds like a great deal huh? That is until you dig in deeper to understand all the hidden stipulations, regulations and constraints. That and $1100/mo lot rent.

Good luck!

Thanks so much for the guidance! Before posting the original msg. I talked with the management office and they said they are about 80% 55+ and 20% under 35. I verified they will let a 35 yr old live there, but I need to double check if that is just to rent or also to own. They definitely allow subletting / renting. the high monthly lot rent is a concern of mine as well. And I’m going to call the owner back and ask how long he’s been trying to sell it and why he hasn’t been able to sell or rent it yet. He’s already advertising on craigslist. Do you guys have any suggestions for where to post a test ad? I’m thinking mhvillage.com. I see that’s where the management company advertises other units in this park. Also forgot to mention, if he doesn’t sell it then, he said he’ll just “let it go back to the park” which I think means the park takes possession of it and resells it.

Great start Greg,

  1. I think MHVillage charges. You could also try MHBay. But for now do Craigslist - its fast and free. Put under For Rent section

  2. Go to Rentometer.com and input the park address. Find out the apartment rent comps for 2 and 3 br. If you see that 2 br apts are also renting at $750 then you may have problems. If its less than 750 then you will have problems.

  3. You are guessing correctly. If I as park owner can get a home for free, sell it for $1000 plus 550 lot rent WHERE do you guess my incentive could be? That is why its important if you proceed to get an agreement with the park IN WRITING!

Happy hunting