Thursday, May 20, 2010

Update: 3/2 Singlewide Mobile Home In a Park (Bank Owned)

Thought I'd give everyone an update on the mobile home I mentioned in this post - I've been in negotiations with the bank on this one.

So, I got all my numbers together on the fix up work needed to bring this home in marketable condition. And, I presented my offer to the bank. Here's what I came up with:

$1800 - condenser air conditioning unit (none there)
$1325 - carpet, padding and tack stripping (carpet gone in all rooms including hallway)
$776 - skirting (skirting gone)
$783 - front porch to be built on site to park specifications (none there)
$297 - back porch to be built on site to park specifications (none there)

$4981 - total fix up work

(Note: This is why it's important to build a team. With just a quick phone call, I can call up my contractors and they can estimate for me what these items would cost).

In addition, I made it a stipulation that the taxes must be paid and brought current (there were around $500+ in back taxes owed) as well as the lot rent (2 months back lot rent - $1000+).

Along with my offer, I also noted that the home will stay in the park if my offer is accepted.

(Note: Per the bank rep, I was advised my offer had a better chance of being accepted if the home were to stay in the park).

So, how did I come up with my offer?

Well, going into it I already knew the market. I knew a home like this would sell owner finance around the mid 20k-high 20k range. I knew the down payment amount would probably be around $2500 and cash flowing in the $500-$600/month range.

Based on these numbers, I knew the most I could get myself into this (total) would be around 13k. I worked backwards based on the fix up work needed. So, I came up with an offer of 6k.

(Note. When negotiating and making offers, you always want to give yourself some room to negotiate. Most times, I go in with a lower offer than my maximum allowable offer. Then, I expect some countering back. If I can arrive close or at my maximum allowable offer, then I'm able to make the deal work).

When I presented my offer to the bank, I justified my offer to the bank rep. I told the bank rep there's just no way I could go higher with all the things missing that the home needed. The bank rep understood and told me it's actually a decent offer.

Furthermore, I told the rep I'd be willing to up my offer if the bank were able to provide all of the items or some of the items needed. I told the rep my main concern was the missing a/c condenser unit and the front porch, which are very big ticket items. If the bank were able to provide these items, then I'd be willing to up my offer.

Though, when I said this the bank rep responded with a "Uhhh, we don't do that kind of stuff. We're just trying to sell this thing "as-is." But, I was trying to be the good investor so that I could give them options. And, the bank rep told me it was much appreciated as most investors they run into just give them really low ball offers with no justification whatsoever.

In any case, the bank is mulling over my offer on this one. So, we'll see.

(Note: I don't really spend all that much time with the banks. Usually, the homes that I pursue with the banks are only those that are pointed out to my by the park managers in my favorite parks. For this one, the park manager told me about it as the eviction took place 2 months ago - it had not even made the bank's distribution list of homes taken back yet).

I hope this example will help give you a better idea on how I go about negotiating and making offers.

Speaking of negotiating, I've been in negotiations on quite a number of other mobile homes. This time of the year (spring and summer) is one of the best times to find both sellers and buyers - people are moving out as well as moving in.

To give you an idea, here are a couple of other things I'm working on:

3/2 Singlewide In a Park, 16x80

3/4 of an acre mobile home lot with 2 mobile homes

2/2 Singlewide In a Park, 14x76

These are just a couple as there are quite a number of them with the time of the year and all. Though, I will continue with the updates along with the case studies since many have said they have enjoyed reading them.

Happy investing!

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

1 comment:

Anonymous said...

U seem to know whats up with this stuff, and be a good POC for info not as an investor but as a buyer.

this page is a bit old and don't know if its still active.