Thursday, August 5, 2010

Deal or No Deal: 3 Mobile Home Lots With 2 Mobile Homes

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 for 3 mobile home lots with 2 mobile homes. I got the call from a family who was a friend of someone I had spoken to awhile back.

(Note: Usually, when I talk to people for some reason they remember me. Maybe it's my demeanor and my laid back way of doing things. I get a lot of compliments from folks who tell me that I'm different from most investors - I come in more of a consultant than anything else. I always try to come up with solutions for folks - it doesen't always have to be working with me).

In any case, this family had run into quite a bind with their personal situation. One of the family members had been going to the hospital lately and they needed money to pay medical bills. So, they called me asking if I'd be interested in their lots and mobile homes. So, I decided to go and check it out.

(Note: Right now, I am looking into mobile home lots. It will be a nice addition. I guess I am following in Lonnie's footsteps - he also transitioned into mobile home lots from doing "Lonnie" deals. The good thing about the lots is that it's still the same concept - it's still like being the bank. And, I don't have to deal with the management issues involved with owning a park).

Since I took the time to learn my market, I was a bit familiar with this area. In fact, this area was where I did a mobile home move awhile back.

When I first drove into the neighborhood, I wasn't quite sure of it. It looked a bit shady. Some homes were kept up, some were not. It was not uniform all across the board. And, there were some homes with some really broken down cars. Not a good sign. It was a mix.

Shot of 3 lots with 2 mobile homes

So, the story was this family bought the 3 lots about 8 years ago as an investment. They bought the lots as raw land - there was no infrastructure on it. And, nothing on it either.

They installed an electric pole, but there was no water. They placed 2 mobile homes on the lots about 5 years ago with just the electric hooked up to one of them. As for the water, it cost too much to get a water tap and septic - they did not have the funds to do this.

So, they rented out the mobile home with the electric hookup to one of their daughters. Since this family lived down the street, the daughter and her family would drive down the street to their home if they needed to use water facilities. (Kind of crazy!) Thing is, their daughter and her family moved out about 6 months ago as they no longer could live there. They were paying this family $200 per month for usage of the mobile home. But, that stopped when they moved out.

And, the second home was never lived in. It was never hooked up as this family did not have the funds to hook it up. And, it was used as storage by another daughter.

(Note: Typically, I do not buy homes that have been vacant for years. If it has not been lived in awhile, there can be many issues that come up. One of the questions I always ask when visiting vacant properties, is how long has it been vacant. If it's recent, it's ok. If not, I'm extra careful and take the steps to make sure I know what I'm getting myself into).

In any case, when I first saw the homes I knew it wasn't anything I wanted to pursue. Basically, they looked like fixer uppers - too much work involved for me.

Mobile home #1 - 2 bedroom, 1 bath (used as storage for years)

Side of home

Mobile home #2 - 3 bedroom, 2 bath (electric but no water hook up, lived in by daughter and her family)

But, I did suggest to them that I knew a fellow investor who may be interested in taking a look. I told them he buys fixer uppers and moves them to his land. I told them this guy was ready to go - he had the mover and everything.

This family appreciated my help. I called up my fellow investor right there on the spot. He took my call, I handed my phone to the family and they made arrangements for him to come and see the homes.

(Note: I have a few fellow investors I work with on a regular basis. If I pass on a deal, I typically call them up based on their criteria and what they are looking for. If they end up buying, I am rewarded for my efforts. So, it's not a complete waste of time. My goal is to find solutions for these folks. And, sometimes I may not be the best solution).

As for the lots, they asked me if I'd be interested in them. I told them I'd have to think about it. I wasn't quite sure of the neighborhood. And, the fact that there was no water tap and septic concerned me. I've heard of this costing between $10,000-$20,000 - I've looked into it before.

I told the family it's best to try to sell these homes first to get some immediate cash. At first, they were trying to sell the homes with the lots but kept getting folks interested in owner financing who they thought were a bit shady. I told them it's the homes here that attract those kind of people. If they were to fix up the homes, maybe they'd get a higher type of clientele willing to pay cash. But, that would take time and money - a route they did not want to take.

In any case, they thanked me. They told me if I'm interested in the lots, they'd be willing to owner finance them and sell to me at or below cost.

To me, that wasn't the issue. It was the neighborhood and putting in the proper infrastructure. Plus, I'd have to go find nice homes to place them on. I just wasn't sure if I wanted to spend all this time and effort on this one deal - was it worth it? Or, maybe I'd pass and spend my time on something ready to go. I'm still thinking about it.

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!


Julie Broad said...

Great case study Rachel. It is so important to network with other investors because there are so many deals out there and often something that doesn't work for you or for them is a perfect fit for the other party!!

Mobile Home Gurl said...

Thanks Julie, I'm glad you enjoyed it! I definitely agree. I think everyone has different criteria on what makes a deal for them. If something doesen't work for me, it may work for someone else! For me, it's all about finding solutions to people's problems. Even if I may not be the best solution, someone else may be able to help. Thanks for the note and for stopping by! :)

Anonymous said...

Good post and this fill someone in on helped me alot in my college assignement. Thanks you on your information.

Trailer Boy said...

They look cool, but the one in the fourth picture down looks
it would fall apart being moved. I know a guy that would
say the same thing, since he has looked at these before