The date was May 20th, 2002 and was standing (mouth open in shock) inside my “newest” mobile home acquisition; a 1981 doublewide located in a clean mobile home park. When I originally looked and agreed to buy the mobile home I did my own inspection. Upon inspecting the home I only quickly walked thru and failed to remove large furniture or area rugs to look at the condition of the floor! I was now the “not so proud” owner of a mobile home with more holes in the floor than a slice of swiss-cheese. If I would have known about the holes I would have made them give me the home for free or paid me to buy it. Instead I figured I just had a $2,100 lesson for this junky mobile home that would surely need more money, time and repairs
I had been only investing in real estate for 3 months at this time. I had no extra money to pay anyone to repair this mobile home and didn’t know the first thing about floor repair myself. It was looking as if I was going to have a crash course in fixing floors. This could take weeks or months before I ever see a PROFIT! Plus the first month’s lot payment (pad rent) is coming due in just a matter of days.
So there were my problems!
- I had a big, messy mobile home.
- It seemed it would take months fixing the mobile to get it marketable for sale.
Here’s what actually happened
The first Saturday I spent an afternoon sweeping the home and removing misc furniture and scattered toys left behind from the previous owners (that’s the only maintenance I completed). I ran an advertisement for “Handy Man Special” in my local newspaper. The responses were immediate.
Within 3 days I found an approved buyer. I sold the home to a very “handy” family for $17,500 @ 13.20% over 5 years. Why would anyone pay that you ask? Buyers want a nice home with fair payments! The mobile home itself was messy, but had a solid foundation with great potential once cleaned and fixed. And the buyers saw this!
I made the home affordable upfront
Once the family passed my background checks, I sold the home with NO down payment or deposit, $550 a month for the first 2 months, and $750 for the duration of the payment schedule.
Understand I am happy to accept “sweat equity” instead of a down payment. This “sweat equity” down payment shows many things, one being that the buyers are willing to make the house a “home.” Once finished, the mobile home will have a great deal more sentimental value than if already clean. I have found that this emotional attachment increases the likelyhood your payments will be in on-time every month.
This was when I learned a very valuable lesson
The fact that there are dozens of “motivated/on-time paying/job keeping/savings account having/no criminal record/drug-free” buyers that desperately want to own a home of their own, even a “fixer-upper” mobile home. But, these serious buyers need someone to work with them! Many “good” buyers have gone through a rough time in their past: bankruptcy, foreclosure, credit blemishes, etc. Screen your people well because there are certainly more flakes out there than serious buyers!
There was so much stacked against this deal and it still makes me thousands every year for the past 8 years (The first family had to move out of state but left me with an almost mint condition mobile home).
Keep in mind that selling a “handy man” deal to a sweat equity buyer isn’t reserved for only mobile homes; compared to traditional housing which typically involves getting a mortgage, closing costs, taxes and insurance payments every month, mobile homes in parks typically only have a small out of pocket monthly park fee (+/- $200-$400). This low monthly obligation for you means you’re financially able to “work with someone” who wants to fix the home, perhaps pay a discounted amount, AND you still net a positive passive cash flow of money every month.
– J. Fed