Modular home solid rental... to flip or to run?

Question

So I'm familiar with the 50/2% rule and I know money talks. As a landlord and investor would you buy a modular home IF it was positive cash flow above the 2% mark?

This guy wants to sell a 3 br, 2 bath, storage shed, fireplace, in good shape modular home (doublewide) that is near a college campus (always has tenants) for about $10,000 cash because he's motivated.

Total rental income is $895
Lot rent is $480 
+cash-flow is $240

I would sell it to an investor for $21,000 (other modulars in the same area go for $24,000+ w/ similar comps)

2% rule = 2.29%

My hesitation is will I be able to sell it? Do investors stay away from modulars, trailers, and the like? Is there a stigma? or it doesn't matter as long as the numbers are good and they make money?

Thanks!

Rusty Thompson · Answer

I don't know if I would buy that as a investment.  There is not chance for appreciation & over time it depreciates. For the long haul I don't think I would be making enough to make it worth it. Also, if I can buy another unit in the park for 24k... yours wouldn't be that great of a demand at 21k. A little savings but not great.

If I was you, I would owner fiance it.
25k w/ 5K down @ 10% interest for 5 years. 
You would have your initial investment back in a year & you would have a 500$m income for the remaining 4 years. Get a few houses rolling like it & you are making good money.

Just my .02$

Sam Sagor · Answer

If there's no nasty repairs hiding around that looks like a go ahead. Still start out with owner finance at 25K that was a good suggestion. Check out deals on wheels then find your rent to owner.

http://www.amazon.com/Deals-Wheels-Finance-Profits-ebook/dp/B0036ZAO66/ref=sr_1_2?ie=UTF8&qid=1332453104&sr=8-2

Michael Lerch · Answer

Thanks for your $.02 Rusty. It makes a lot more sense that way. 
I'm just starting the wholesale game so I don't have the capital to do that myself at the moment, but I love to learn new ways to make money!

also I misquoted my selling price. It would be $16,800 which would make the 2% rule = 2.86%. It makes it a good selling point over the others at 24k+