Tear down old home?

Hey guys,

I have a 1972 abandoned mobile home that came with our recent purchase of a park. According to the manager, this home has been abandoned for nearly 6 years. I’m undecided about whether to tear the home down or try to sell as a fixer-upper.

The bad:

  • Some mold in the insulation and walls, and in the ceiling in 3 different spots

  • Roof is in bad shape, but I believe it could be fixed and made water tight

  • Electrical probably needs updating

  • Older 2 bedroom home

The good:

  • Exterior is decent with good paint, just needs skirting replaced

  • This park has large Hispanic demographic and might be able to find a very resourceful person to fix up the home

I guess that’s more bad items than good, but just not wanting to throw in the towel on this home yet. How do you judge between fixing an older home like this versus tearing it down?


How much will it cost to fix it? If it’s $5,000 or less, than it’s a no-brainer to keep it, as you’ll have to buy a home for $1 that is in mint condition and move it in for $5,000 to match that price to keep the lot filled. Up to $10,000, still probably a no-brainer, based on the available housing stock to replace it. And that does not even include the soft-cost risk like the city making you upgrade the lot, challenging you on the grandfathering, etc.

Robbie -

One of the key factors in your decision-making actually has nothing to do with the house itself. It has to do with your lot rent. How much is your lot rent?

What I’m getting at is that your budget for repairing a mobile home (and your budget to bring in a new home) is at least somewhat dependent upon how much value it will bring to your land when that lot is occupied. A savvy operator will not over- or under-improve his/her mobile home park.

Consider this:

The industry average value of an occupied lot is the lot rent times 60 (if you pay utilities) or times 70 (if tenants pay utilities).

So if your lot rent is $225, and your tenants pay the utilities, then your land value will increase by $225x70=$15,750 when you fill the lot with a rent-paying tenant. My rule of thumb is that I will spend up to 1/3 more than the improved land value to bring in a new mobile home (actually a used home, but ‘new’ to the community).

So my budget in this scenario would be that I would bring-in a new home for $20,000 (all-in delivered, set, rehabbed, ready-to-rent cost). Bringing in a $30,000 home would definitely be over-improving a property with $225 lot rents, and bringing in a $10,000 home would definitely be under improving the property.

So knowing that I would get a better-quality resident, and even make some profit on a $20,000 home (see my posting in the ‘NNN POHs’ thread) in addition to making money on the lot rent, the question then becomes, “How much would I spend to rehab the junky home that is there? Or should I scrap it and bring in a new home?” My rule of thumb is that I will spend 1/3 of my ‘new’ home budget to rehab a really old 1970’s mobile home; roughly $7,000 in this case. (I’d spend more if it is a newer 16-wide.)

Your question about budget for rehabbing a really old home lands squarely in a grey area. Frank & Dave would probably not spend more than the $15,750 on a new home (e.g. not more than the amount the land increases). I’m willing to go to about $20,000; I nearly double my money with the increased land value, plus the mobile home still has considerable value.

The decision on ‘fix junker vs. buy new’ is yours, but think about how much capital you have, how much value it will add to your land value to get a home occupied and pumping rent into the land, and what the ‘soft’ benefits are worth to you to have a better-quality resident (less turnover, damage, and drama) in a $20,000 new home, vs. having a lower-quality resident in a 1970s 12-wide that you’ve spent $7,000 on (and the occupants of which may drive away better-quality residents, and turnover every 9 months leaving you with 1 month vacancy, and leave after doing more damage).

Hint: you’ll make money either way. (:P)

My bias is towards upgrading the parks I own, even if it means I make a bit less money percentage-wise. Frank & Dave invest somewhat less in homes and make a higher return and are about 80x larger operators than I am. ::o

Your mileage may vary, but that is my advice,



My goal is to always move toward upgrading my park whenever I have the opportunity and by doing so upgrade the quality of my tenants. Whichever decision you make, rehab or replace, you will achieve this goal to varying degrees. Each time I do a reno the sale price has set a new bench mark for homes in my park. Our prices are different up here than in most of the US but when I aquire a old home (0 to $20,000) in my park they resell in the $65,00 to $85,000 range when compleated. The quality of tenant changes from bottom of the barrel to top of the ladder.

I never sell a “fixer upper”. This is a surefire magnet to the lowest possible quality of tenant. You have little to no control over the end results and will ultimatly be taking a huge gamble.

If you want something done right do it yourself.

Appreciate each of your comments. I’ve sold “handyman specials” in another park of ours with varying degrees of success. One guy took an old 1970’s model home and completely remodeled interior and exterior. It’s one of the nicest homes in our park now. However, a few others really didn’t do a whole lot to upgrade the home after I sold it to them.

This park has lot rents at $205 with tenants paying their own water/sewer. The rent is under market currently. Nearly half the tenants are Hispanic and I’m going to see if I might find a good candidate to take this home and remodel it. I understand the concept of upgrading the park with newer homes in order to attract higher quality tenants. But I will probably bring in newer homes in the next year or two and set on a few of the vacant lots.

Thanks again…

What is your geography where rehabbed mobile homes sell for $65k?


Ontario Canada.

Way different world of mobile homes up here. I keep reading about you guys bringing in new homes for $30,000 and consider that a drop in the bucket cost wise. If I could buy them for that I would be rich in no time. Unfortunatly the majority of manufactures are in the US so we get screwed bringing them across.

We are presently looking at buying a new (2013) 16’ X 68" 2 bd, FAIRMONT and are expecting it to cost $75,000 - $80,000 buy the time it is set and skirted. Purchase price, before taxes, transport, permits, setting, skirting etc, is $61,000. Taxes alone on top of that price is nearly $9,000.

I expect to sell it for around $95,000.