How do you value used homes? The park I’m buying comes with 64 POH. All older 70’s and 80’s. Not bad condition. I plan on putting new skirting and pressure washing and painting them prior to selling them.
There is tremendous demand in the area. Test ad was pulling 3-4 calls per hour - phone rang non stop.
Is it unrealistic to go with $4000 to $5000 valuation on a rent credit program? I’m getting the homes basically for free.
The homes should be valued on what they would sell for on the open market. Others are more experienced, but these hold hold minimal, if any, value.
Once you learn how to make adjustments for location correctly, NADA has an on-line valuation system that is fast and very accurate if the person inputting the information knows what they are doing for more expensive homes.
In the range you are discussing $5,000 seems reasonable. I’m not sure why a community owner would charge less unless they wanted the home pulled out of the community because they were upgrading the homes in the community.
Frankly, if the home is functional and in reasonable condition, $5,000 would seem like a bargain unless the lot rent is too high for the market.
Thanks Rishel, Given the response I got from my test ad, I have a hard time believing someone won’t pay at least $3,000 to $5,000 for a 2 bedroom home in decent condition.
It all sounds correct to me. The demand for affordable housing is enormous in just about every market with a decent economy. If you are used to a business that requires a ton of cold calls to make a single sale, then this business is the polar opposite.
If they are basically free as you say then give then to the tenants as long as they are with you for at least 3 years and get a legal opinion as to best process to accomplish such. POH can drain your time and money and in reality the park business is about renting spaces not taking care of rentals or if you like rentals apartments in certain areas are better buys than parks. We have always bought parks +95 occupied by home owners and then bring in newer homes to sell to be 100% When you sell a park where is the higher price parks with tenant owned homes or POH??
Thank you Frank.
Carl, I considered giving them away, but there is a downside to that. 1. I’m going to Kool Seal the roofs, put new skirting on and paint most of the homes. 2. This is the most important reason - I really don’t want the kind of tenant that can’t afford to pay $5,000 for the home. It’s about weeding out the less desirable tenant. I want a nice park with quality people that can afford to keep their place nice.
Also, if I give them away for free, they have no skin in the game and won’t keep it up. What the hell do they care if they tear it up if they got it for free?
The only way to sell a home for $1 is to advertise another home for $5,000 and when the customer inspects the first home, say to them “do you want to see something less expensive?” They will, of course, say yes, and after you show the $1 home a few times, one of the $5,000 buyers will take it, doing the math that they can renovate it cheaply and to their tastes. If you advertise “home for $1” you will, normally, get people who only have $1 and can’t afford to do any remodelling or pay you lot rent effectively. Of course, this necessitates having one home to show from (the $5,000 on in this case) and sometimes you only have one home and no show home to work from. But you get the idea.
Excellent advice. Thanks Frank, I love the idea.
This looks to be a pretty good deal if everything checks out. I could honestly retire just on this one deal, and I have you to thank. There’s just no way I could have structured this deal without the knowledge I’ve gained from the boot camp, this forum, etc. It took some creative thinking to put this deal together, I don’t want to give too many details until I finish DD and actually close but I’ll keep you informed.
This is a classic turnaround, brother and sister inherited the park from mom and pop and you know the rest.