4 Due Diligence Steps to Take BEFORE Purchasing a Vacant Mobile Home

4 Due Diligence Steps to Take BEFORE Purchasing a Vacant Mobile Home

4 min read
John Fedro

John Fedro has been actively investing in individual mobile homes since 2002 and in parks since 2016. Additionally, he’s been assisting other mobile home investors since 2006.

Experience
Investing since 2002, John started in real estate accidentally with a four-bedroom mobile home inside of a pre-existing mobile home park. Over the next 11 months, John added 10 more mobile homes to his cash-flowing portfolio. Since these early years, John has gone on to help 150+ sellers and buyers sell their unwanted mobile homes and obtain a safe and affordable manufactured home of their own.

Years later, John keeps to what has been successful—buying, fixing, renting, and reselling affordable housing known as mobile homes. Like almost every long-term investor, he’s made more mistakes than he can count. John discusses many of them on his blog and YouTube channel, where he shares his stories, experiences, lessons, and some of the experiences of other successful mobile home investors that he’s helped.

John has written over 300 articles concerning mobile homes and mobile home investing for the BiggerPockets Blog. He has also been a featured podcast guest on BiggerPockets and other prominent real estate podcasts, authored a highly-rated book aimed at increasing the happiness/satisfaction of average real estate investors, and spoken to national and international audiences concerning the opportunities and practicality of successfully investing in mobile homes.

John now spends his time actively investing in individual mobile homes and acquiring parks. He focuses on enjoying his time and partnering with other investors around the country to grow their own local mobile home cash-flowing portfolios and reputations.

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Vacant mobile homes come in all shapes, sizes, ages, and conditions. If you have not walked through or purchased a vacant manufactured home yet, you will — especially if you plan on purchasing or investing in mobile homes in the near future. While these homes can absolutely offer tremendous value and profit, there is of course proper due diligence to be done before pulling the trigger on any deal.

Below are a few things to consider before purchasing or investing in any vacant mobile home inside a pre-existing park or attached to its own private land.

4 Due Diligence Steps to Take BEFORE Purchasing a Vacant Mobile Home

Learn the Seller’s Story

It can be very important to understand why the current home is vacant. How long has the home been vacant? Where are the sellers living now? Is there something wrong with the home, community, or land?

Many times sellers have perfectly logical and rational reasons for their mobile homes being vacant, such as they purchased a new home, moved across town, upgraded, downgraded, etc. However, other times there may be structural problems with the home, utility problems with the park, flooding issues with the land, or a combination of literally thousands of other issues. The important takeaway is to make sure you understand any potential problems with the home you may be buying.

Related: The Top 5 Reasons Investors Are Loved & Hated Within Mobile Home Communities

Pro Tip: Look and listen for inconsistencies in the seller’s story that may lead you to believe the seller is lying or omitting certain truths.

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Ask Park Management a Few Questions

Ask the park management if they are aware of any problems or current violations with this vacant home. The seller of this vacant mobile home may be a private seller, or the seller may be the mobile home community itself. This is because many mobile home communities will occasionally find themselves with a mobile home they need to resell. These vacant homes may be in need of repairs or conversely may be in move-in ready condition. If you are purchasing directly from a community or park manager, aim to negotiate 3-12 months free or discounted lot rent for a fast sale. Be aware of all current and proposed park rules and regulations to ensure a happy working relationship now and in the future.

Pro Tip: If the vacant mobile home will remain in the current community after you purchase it, aim to become approved at the park management before closing. Make sure to verify all payments, liens, and/or lot rents are current.

Plan an Exit Strategy

Your exit strategies for profiting should be known prior to making any purchase offers on this or any other investment property. If a vacant manufactured home needs repairs, who will be performing these repairs? Will this home be sold as-is for wholesale or repaired for a retail price? Will this home be rented or resold? Can this home be sold via conventional financing or an FHA loan?

Check Out the Electricity

Vacant mobile homes certainly have their advantages and disadvantages. While you are able to walk through the entire home unobstructed from furniture and debris, you may not have the luxury of running water or electricity. In these cases, it can be wise to briefly have water and power turned on temporarily so that you may verify the electricity works, there are no leaks, the hot water heater is operational, etc.

Pro Tip: Pay for this cost only if the sellers will not have the utilities turned on in their names. Turning on power and paying a one-time $100 utility bill may cause you to spot a massive water leak under the home that will cost $1,000+ to repair. These repair costs should then be reflected on an adjusted purchase price and terms.

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Get Inspections Performed

How long have the utilities been turned off in this mobile home? Call the local power company and water company to verify electricity and water are ready to be switched on at this location. If the mobile home has sat vacant for longer than a certain number of months, your utility companies may be required to have the home inspected prior to turning power on at this home. This piece of code law is designed to help prevent fires and deaths in homes with outdated electrical or plumbing issues.

Pro Tip: If your mobile home property is located inside of a park, this community may be able to turn your water on briefly without contacting the city. Consult with your park manager to confirm if this is possible.

Related: 5 Things You Likely Don’t Know About Mobile Home Electronic Liens & Titles

If you want to purchase a vacant mobile home that you fear may need an electrical inspection, call the power and water companies to verify if an inspection is truly needed. If an inspection is needed, aim to have the current owner contact the city/county permit department to schedule an inspection prior to you purchasing the home. This inspector will either clear the home as-is (which would be great) or will likely be very descriptive as to the repairs needed prior to being approved. This will greatly help you in not overspending when purchasing vacant mobile homes.

In conclusion, purchasing vacant manufactured homes is an inevitable part of almost every mobile home investor’s portfolio. Like any real estate investing deal, there is always proper due diligence to perform and possible headaches to be aware of. Through education, asking others for help (through this site’s articles and Forums, it is possible to protect yourself, help local sellers, and create a win-win value for all parties involved.

Investors: Any other steps you take BEFORE offering on mobile homes?

Let me know with a comment!

While these homes can absolutely be a tremendous value and profit, there is of course proper due diligence always be done before pulling the trigger on any deal. Below are a few things to consider before purchasing or investing in any vacant mobile home inside a pre-existing park or attached to its own private land.