I just posted about a MHP opp in Michigan.
In relation to that, I am interested in learning what others are doing to source trailers during this time. We are unable to find any within budget. Do you think this crunch will ease once we hit recession in 2023?
Insights on how to buy trailers, or the timing, appreciated.
The manufacturers I deal with in PA have been steadily lowering their prices since like June this year or so. The backlogs are gone. New homes still cost more than they used to 2-3 years ago but I don’t know that they’ll ever go back to that unless you buy a super low-end unit. I’ve never seen prices of anything go down, it’s always up
Mike, Super helpful to know that. Thank you for your comment. Do you know if the second hand inventory is coming back in your area? We may need second hand and fixers to fit out budget…
I’m not really in the used home business but from what I’ve seen them trade for in my parks is ridiculous. They basically sell immediately and for prices that are equal to or greater than what you can buy a new one for from a manufacturer.
Just to give you an idea…a completely gutted 1979 shell just sold for $17,000 in my park. The buyer lived in it for a little while and then moved it to a private lot somewhere else in the state. All in he told me he spent over $40k to buy it, fix it up and move it. That doesn’t even include his setup costs at the private lot. For that kind of money I’d just get the cheapest new home and skip all the headache. I’m in New England so it might be different where you are.
I have already seen a big decrease in Used-Pullout Home Prices.
I was paying $20-30K for a used home (CA Market) including delivery.
The same guys now offer similar homes for $12-15K delivered.
Either they are getting them cheaper or they cannot sell them at the higher price any longer. I have tightened up on my purchases. My guess is that the other Park owners are doing the same thing.
Is that so in CA? Maybe then we are not totally out of luck! I was fearful that we were going to have to be on ice for a year at the least, but maybe Midwest will follow the Coasts in half a year. REALLY appreciate these early tips.
I understand but think about the $40K. Really, to move into a home and have it set up where you want it for $40k today is pretty cheap. Now I don’t know what condition it is in but with housing prices still high $40k for a roof over your head isn’t bad for a lot of people. When you sell your trailers do you have a length of term clause in the contract? I have heard several owners say that for, “example: $17,000 your must keep the trailer in the park for three years; $20,000 is a two year contract and $25,000 is a 1 year contract.” Excuse the numbers, just gave them as an example. Not sure it would hold up in court or if you could hold the title? Just curious.
I don’t sell used homes in the parks. My tenants will occasionally sell a home when they are moving out which is where my example of the $40k home came from. In the case of my new home sales, I don’t make them sign an agreement to stay in the park for any period of time. They pay full price for the home so if they moved it out the day after they bought it then it would only be their loss when you consider they paid for a setup, a tear down, another transport, and a final setup somewhere else. Any smart person would just go buy a new home from a retailer for less money and have it setup wherever they want. If you make money on the sale of a home (new or used) then it shouldn’t matter if they pull it out in 5 days or 5 years.
So you buy a $50k - $75 home and put in your park. Say you set it up and sell t for 10%-20% over cost. The tenant is paying lot rent and I assume they are responsible for upkeep on the trailer and the lot. I’m sure you vet your applicants but unless you are carrying the note you have a 3rd party company carrying the note. When a tenant moves out and sells or subleases the unit to another party, usually against the terms of the contract, how do you handle this? Seems to be a problem I have read from several property owners.
The buyers have to pay cash or get 3rd party financing. Once the home is sold to them, I am completely out of the picture except in the capacity as the landlord.
They’re allowed to sell their home or sublease anytime. My only requirement is to be notified and I have final approval of anyone wanting to live in the park.
For the period of time that the new home is in your park and not sold - do you insure the new home and if so, what type of insurance would you recommend buying?
I currently have 2 homes on my 21st Mortgage CASH program floorplan, those are insured via their 21st Insurance Agency and I pay monthly premiums until they’re sold.
I also have 3 new homes in my inventory that I own outright. Those are not insured, but they probably should be. I’d probably use 21st Insurance Agency for those as well.