Thursday, May 6, 2010

Deal or No Deal: 2/2 Singlewide Mobile Home On Land

Since I've received a lot of requests for more case studies, I thought I'd make up another post for "Deal or No Deal."

This one is an early 1990s, 14x60, singlewide mobile home. I found this one through an ad on craigslist.

(Note: I don't really use craigslist a lot. Most of the deals I find are a direct result of my network. Though, I do check it once in awhile to see what's out there. So far, I've only found one deal through craigslist).

Basically, the sellers (who were a husband and wife) had initially purchased this home for themselves and moved it to their land. However, when they got it to their land they did not account for the hookups which ended up costing too much money for them.

Though they were able to afford the move, putting in a septic and water system would have cost them $6800 and $3800 respectively. What had happened was that they thought they already had the infrastructure on their land. However, when they looked into it after the move they found out that it was not within their boundaries - the water system was on someone else's land.

(Note: These sellers had this land for many years - nothing was on it. They had bought the land years ago and planned to use it sometime down the road. Up to this point, it had been empty).

When I spoke to the sellers over the phone, they told me specifically that the home needed to be moved off their land. So, whoever ends up buying it needs a place to move it.

Being in the business, I already have a couple parks to work with for these types of situations. Though each park does have their specifications on what they allow and don't allow into their parks.

(Note: Some people have asked me about getting free lot rent from parks. Some parks will allow you free lot rent for a few months or even longer. Though, most of these parks tend to be more lower end type parks. It's really up to you and your comfort level on the types of parks you want to work in. For me, I'm more comfortable with high end parks (due to this experience) - that's just my personality).

The park I had in mind was more a high end park - hey had already agreed to work with me to fill in their vacant lots and help pay for the move. Though, they would have the authority to approve/disapprove what comes in.

So, I went ahead and made a trip out to inspect the home. Here are a couple of pics:

Outside of home

Rotted siding issues due to no flashing

Inside of home

Living room


Bedroom 1

Bedroom 2


Utility area


Overall, the home was in fairly good condition - it looked very well kept. Since it was not hooked up, I could not test the water and the electricity - I had to rely on the sellers feedback and my "gut feeling."

(Note: For me, it's less of a risk if I can test out all the systems in the house to make sure they work (i.e. electricity, water, etc). If one and/or all of the systems cannot be tested, there's a possibility there may be some unknown issues that will come up in the future once everything has been hooked up. I found this out through one of my experiences moving a mobile home. I was able to test out the electricity but not the water (since it wasn't on) - I had a 50/50 chance that at least the electricity worked. Though, when the home arrived at the new site I faced some plumbing issues with the home - it cost a bit of time and money. Lesson learned: It's best to be able to test out all systems if you can).

After assessing the pros and cons, I decided to pass on this deal. Why?

For me, it was just too big of a risk. It had a couple of factors going against it for my own criteria. First, it was a 2/2. Usually, the buyers that I work with prefer a 3/2 and larger. So, I knew this would sit on the market longer. Second, I could not test out any of the systems in the home. For me, this was a big risk especially since it was on a piece of land and needed to be moved. Lastly, it had to be moved. The amount of time and money for a 2/2 for me that needed to be moved that I could not check the systems in the home to make sure they worked was just too much.

So, I passed this lead on to a fellow investor. This investor actually works the same park as I do. Though, specializes in 2 bedrooms and smaller homes which are usually moved from a piece of land into the park.

Since this fellow investor already worked with a market for those looking for 2/2 homes, I saw it as a better fit. Plus, it would be a better use of my time to pursue other deals that better fit my criteria.

(Note: Some investors think competition is a bad thing. I'm here to say, it's actually a good thing. Everyone has their own criteria on what makes a deal. A deal to me may not be a deal to you. And, vice versa. By knowing other investors in the business, you open yourself up to more opportunities).

Though this was not a deal for me, it was a possible deal for my fellow investor. And, everyone has their own criteria on what makes a deal. For me, this one just didn't fit mine.

I hope you enjoyed reading this case study of "Deal or No Deal. I hope it will help you to better understand the thought process when evaluating potential mobile home investments.

If you would like to share a story on a home you've recently passed on or pursued (aka "deal or no deal"), I'd definitely be interested in hearing about it!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!


Terry Drake said...

What was the asking price?

Mobile Home Gurl said...

Nice to see you here Terry, thanks for the note!

The sellers had it listed for $5500. Though, when I went out to meet them and take a look they said they were willing to come down much more just to get rid of it. If I was interested, I'd probably go in at 2k thinking they would probably counter back around 4k. Then, I'd negotiate to come half way to around 3k-3500 (my target range).

Something like this would go for 15k owner financed in the park I had in mind. The fellow investor I passed the lead on to usually does these kinds of deals - smaller homes, 2 bedrooms. Usually, he gets them for 5k and under on land. Usually, he's in it for 10k and under total w/the fixup, move, hookups, holding costs, etc. With the park helping with the move, it helps even more.

Then, he turns it around for 15k with 5k down and $500/month cash flow for about 2-3 years. Though, he has the clientele already for these types of deals since he specializes in them. Mine are different - they are looking for much larger homes.

Hope that helps, thanks for stopping by!

Scott Costello said...

I've had an interest in mobile homes because of the low price points and good things i've heard about Lonnie deals.

I'll definitely continue to read your posts. This was very interesting.

What do you think of Lonnie Deals?

Mobile Home Gurl said...

Great to see you on here Scott, thanks for the note!

What I enjoy about Lonnie deals is that is truly is passive - it's just like being a bank. No maintenance issues, no fixing toilets, no late calls at night. It's really less involved than being a landlord - that's what I like about it.

Though it's not for everyone as everyone has different goals and different experiences on what's worked/not worked, it's definitely worked for me.

I wrote a post awhile back on why I enjoy mobile home investing if you'd like to check it out. It can be found here:

Hope that helps, thanks for stopping by!