I am considering mobile home investing as my next real estate step. The forum post have been enlightening but I am looking to have one big question answered. What if I own a mobile home outright and everything goes wrong? I can't sell it, can't rent it, and don't care about the money, what do I do? If I own it outright I can't turn the keys in. Do you just give it away? I am asking this because I really don't understand the MH investing space and I look at this as the worse case scenario. Thanks in advance for the responses!
There is always a buyer. Mobile home parks have a good following also. So if price is right there is always a buyer. I like buying others problems... I can scoop them up cheap and fix the problems and sell for higher and usually make good margins.
@Jim R. Thanks for the reply! How do you feel about this as a next step in RE investing? I currently have one sf rental and am trying to figure out my next move.
That will never be a problem. You will always sell your mobile home. Don't create problems where there are none. It is scary when you are new to investing, but if you have the courage, and if you have good business sense, it will be the best thing you ever do for yourself, for the time and freedom it allows you to the financial prosperity.
Your worst case scenario: You don't invest in real estate.
@Carey Edmund I live in Midland. I bought two mobile homes in the last 9 months. The first on is still not ready and will probably be another month or two. The 2nd one I bought in Nov and it will be ready by the end of this month. I took a lot more time to buy the 2nd one and got a really nice 18 by 76. I bought it in Keller which is north of Ft Worth. It was 12,000 and cost 6,000 to move. My advice is to look all over Texas and be patient to find a really nice one at a low price. Good luck.
"What if I own a mobile home outright and everything goes wrong? I can't sell it, can't rent it, and don't care about the money, what do I do? If I own it outright I can't turn the keys in."
If you don't care about the money, which we all do or else we wouldn't be doing this, then you can most certainly give it away. If it's in a park the park will take it 9 times out of 10, if not run an ad for a free MH and you'll get rid of it within a couple days. Here's some other options depending on your urgency:
- Scrap it (do it yourself and make a few bucks - otherwise call a contractor or better yet run an ad and folks should show up out of nowhere. They scrap it for free so they can keep the profit)
- Move it somewhere and use it as storage
- Take off the top and use the frame to build a "tiny house"
- Contact a mover and negotiate a "move referral fee" and offer the home for free on the internet and suggest the mover to move it
- Use it as storage where it is
- Use it as an office
- Contact donation charities and see if they'll take it
- Contact local gov. agencies to try to donate to them for housing
If you're not currently investing in MH's but your pondering the worst case scenario this is a great question. Be aware that the compound question on top of this is that more likely this non-selling and non-performing asset is probably located on someone else's land (a park) and that your clock (lot rent payment) is ticking as you decide how to liquidate your home. Due to that, the best advice is to try to give it to the park or offer for free to someone else so that you get out from under the lot rent.
If that doesn't work, and money really isn't an issue, I'd check with the DMV about abandoning the home/title so that you're not on the hook for lot rent in subsequent months. Never done that but there has to be some way to get rid of the thing if you can't give it away. All else fails call the fire department and see if they'll burn it for you :)
I agree whole heartily that not doing anything is truly the worse case scenario. I am ready to continue the steps toward financial freedom it's just a question of which vehicle is the right next vehicle for me. I am a big believer in buy and hold and flips but applying that to mh investing seems crazy because I was alway taught (by non RE investors) to stay away from them
Thank you for the encouragement and the great advice. I want to get a couple in the metroplex before venturing too far out. I want to make sure I have a strong foundation and understanding in order to minimize my risk.
Thank you Sam for running me down the worse case list. Your breakdown was just what I needed to see. It actually made me feel a lot better about moving forward.
@Carey Edmund I did not mean for you to go out side of your area. Some people like working out side of there area. I won't even go to Odessa which is only 30 minutes away. My time is too valuable to me. 30 minutes there 30 minutes back and you have waisted an hour. I like areas that I am going to be close to anyway. Look in your area where you would move the MH. Then look through out Texas for one you can move onto your land, MH park, or someone else's land. This is why it cost me 6,000 to move, because once I found where I was moving it to here in Midland I had it moved from Keller. If the price for the MH is right it is worth moving.
Do you have them placed in a park? If so, how did you overcome the objections to placing a rental MH in the park that they don't control? Seems a lot of the parks think this is competition to their own rentals.
@Roy Oliphant That is a concern of mine also when thinking about purchasing in parks. Most that I have contacted do not allow renting of the unit (does seller financing fall under this also). Don't want to put in the investment to fix differed maintenance and then not be able to rent or sell with financing. Also do not want DF issues. Even if the park does allow renting what if they change the rules mid stream? Will you have to comply when the unit becomes vacant. MH on land, at least you have control of home and land.
Lots of great ideas. As mentioned, you can give them away or sell for a thousand or a couple thousand and get rid of any with issues quickly. I bought 1 for $1k that needed work. After getting it, I decided I didn't want to do the work, so sold it (wholesale) for $3k on Craigslist. The guy was ecstatic.
I'm on my 27th one in 20 months. Did stick built before. Have only done one on a lot. ROI much nicer on mobile homes. Most of mine are in parks. Most parks, I have worked with, DO NOT allow rentals. In the ones that had rentals, the owner wouldn't let anyone else work in them. In most parks, residents must have bought them or be buying, at least on contract. No rentals, lease options, etc.
Make sure the park you are looking at is workable. That is, I initially thought a local park was workable. Bought 4 in 3 weeks back-to-back BEFORE I got one sold. Mistake! Found that the owner, although initially nice, was EXTREMELY difficult to work with, punitive demands and hard to get people qualified to move into the park. If I'm paying rent the owner is in no hurry to qualify people. Got 2 sold, still have 2. I'll still do fine, but it's eating my profit.
Going forward I will go into a new park carefully. Buy and sell one, as a test, to ensure the park is workable, before jumping in more. If we don't have challenges we don't learn anything new, right?
Alternate options: Only buy on lots in a city of good size so you can sell them. Or as mentioned above, buy and move to your location. Buy newer ones in parks, or move to parks, so they can get a loan and have a couple lenders to qualify people to buy from you. You get cash.
Why parks? Utilities are already in place. Just hook up. Move to land and there 'may' be additional unexpected costs.
Check out @John Fedro and @Jerry Lucker on this blog.
Good luck and have fun!
I think I speak for @Bill Neves as well as most of the folks dealing in parks. Your lifeline is the park owner/manager and it is paramount to create a good working relationship there.
Do your best to negotiate rent concessions (promise them you won't move a home out in exchange for 2, 4, 6 months of rent concession if and when your home is vacant. They keep their park filled and you get a little break when you get turnover as ultimately you will.
That said, the BEST advice I could pass on at this point is to GET THE AGREEMENT FOR CONCESSION IN WRITING!
I had 3 vacant in a park last year (1 rehabbing 2 had just moved in there) and on the 15th I got notice that a mother and daughter tenant of mine were both leaving (each had a home) and a week later I had another TWO tenants vacate - it was my month from hell. By the end of the month I had 7 vacant. I had previously had a rent concession agreement in the park that started off as a lifetime concession. I got a little too much on my plate and had a couple homes vacant for a while so it was re-negotiated to 6 months and then ultimately to 3 months. I did not get this in writing. After my 7 homes became vacant the park called around the 1st and asked for lot rent (they demanded it) and after a nice heart to heart with them they ultimately decided that they wanted their money more than they wanted to keep their word.
I'll never forget the last thing they said: "We don't want to work anymore concessions. It costs over $5000 for someone to move and set a home, we don't think too many park residents can afford that so we're going to make you pay the lot rent".
GET YOUR AGREEMENTS IN WRITING! Hope this horror story helps others to keep from getting the same end of the stick. And before the judgement comes down, this was a relationship over 3 years old, lots of history and they had actually basically become friends of mine. If you're going to run a business in parks (another conversation for another day - plenty of posts/forums on here of the pro's and con's) get your rent concession agreements in writing!
Lots of good advice on this topic. I agree house will sell at Some price! The first thing to do is determine what comparable units have actually been selling for and base the other 3 numbers you need off of that.
1) selling price 2) hold/fix cost 3) profit wanted 4) purchase price.
Then, 1-(2+3) = 4. The key here is to only do projects that have a good profit built in. That becomes your safety net.
Bottom line - flipping mobile homes in parks can be highly profitable once you understand the business. It's a different animal than real estate. It is still affordable housing which is more in demand now than ever.
Who the hell wants a mobile home for scrap. Too little metal, and too much afterbirth. I guess you can always get some druggies to pull the most valuable metal, and leave the mess for you
@Roy Oliphant Sorry it took so long to reply. So far the homes I have bought I had property for so I am not in MH parks yet.
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