Mobile homes package deal advice

11 Replies

I have an opportunity to invest in a bundle of mobile homes and it seems like a good deal but want to see if someone has an angle I haven't considered. 10 mobile homes (approx 15to 25 years old), all rented (by a company; $5500 gross monthly rent), no vacancies (for the  past several years) already set-up, mixed condition but all liveable, $200 a month lot rent, $135,000 for all 10, 10% down, owner financing, payoff in 5 years ($2025 per month), 0% interest.  Net $1475 after note and lot rent. Jumps to $3500/month at 5 years after note is paid off.  Freshly paved roads in the park (paid fir by park owner) and to the park. All other units are tenant owned. Central sewer system. He's offering to repair some outstanding issues which are minor. He put a new roof on one unit. Presently installing new appliances and cabinets in the newest unit. Seller owns the park and is responsible for everything on the ground (including lawn car and sewer system). Lot rents will not increase for the next 5 years. That's all I can think of. Thanks for any advice or input. 

Who manages the park currently? If you buy it are you going to manage it yourself 

or hire a park manager? You state a central sewer system, does that mean it is on city water? Even with no current vacancies...I would at least plan for them if I were you. 

Another idea would be to put an ad on craigslist for a trailer in that park, just to see if there is an interest.

I was going to answer this question here but I will refer you to  where you can get all the answers you want.

Go to mobilhomeparkstore.com    Sign up, it's free and put your question in the forum there.  You will get your answer from the people that know and understand what is going on in that deal.

Originally posted by @Rich Prestridge :

I have an opportunity to invest in a bundle of mobile homes and it seems like a good deal but want to see if someone has an angle I haven't considered. 10 mobile homes (approx 15to 25 years old), all rented (by a company; $5500 gross monthly rent), no vacancies (for the  past several years) already set-up, mixed condition but all liveable, $200 a month lot rent, $135,000 for all 10, 10% down, owner financing, payoff in 5 years ($2025 per month), 0% interest.  Net $1475 after note and lot rent. Jumps to $3500/month at 5 years after note is paid off.  Freshly paved roads in the park (paid fir by park owner) and to the park. All other units are tenant owned. Central sewer system. He's offering to repair some outstanding issues which are minor. He put a new roof on one unit. Presently installing new appliances and cabinets in the newest unit. Seller owns the park and is responsible for everything on the ground (including lawn car and sewer system). Lot rents will not increase for the next 5 years. That's all I can think of. Thanks for any advice or input. 

 Can you find traditional financing?  This deal scares me from a common sense perspective.  It sounds too good to be true.  Why would someone sell something this lucrative so cheaply?  Something's fishy.

Check to see if there are some kind of new regulations coming down the pike with regard to mobile home parks.  

I'm not an investor, but I smell a rat.

There are 38 lots in the park owned by the seller who is the park manager. The other lots are rented by individual tenants who own their mobile homes.  I don't see any vacant lots or empty units. 

The seller is not interested in maintaining the units. He has 3 other parks and only wants lots to rent.  I would be managing these 10 units which are already rented. 

What would be the advantage of traditional financing? Seems like many other discussions on BP recommend owner financing. This deal has good terms and owner financing is less complicated. 

Good advice. Thanks for the responses. 

It sounds like a pretty good deal.  Two things I can think of is you need to remember that even if the trailer is not rented, you still owe lot rent.  Also, I have found that mobile homes require more maintenance than houses, when tenants don't take care of them, they fall apart faster.  Also, the mobile homes will not increase in value.  I can see why the park owner wants to get rid of them, they are more maintenance than just renting the spaces out.  I currently own 1.75 acres with 4 mobile homes on it.  My plan is to pay it off this year and build a 6 plex and sell the mobile homes and rent the lots out.   I find I spend more time doing repairs on the mobile homes than I do on my other 7 rentals combined.  Good luck but sounds like pretty good income, and the owner finance keeps the loan off your personal credit.  My land and mobiles are owner financed as well. 

@Rich Prestridge I agree, this sounds fishy and I think the maintenance on the units is what's going to kill you. I used to own three mobiles on a lot in Indiana. The turnover of the tenants and ongoing maintenance of the homes ate up any profits I thought I was going to make.

Also, it sounds like he's charging too much for the homes. If you shop around and compare prices I bet you'll find that you can buy mobile homes for $5,000 or less so you'll be paying more than twice that much if you take his deal. I'd be asking why he isn't just selling them to the tenants that are living in them. If it was my park that's what I would do.

The reason he is not selling them to the tenants is that he is trying to find someone to take advantage of. Value of the trailers is about 500 if that. If 72 or older you cannot move them into another park in most areas. There is no financing available except for him.

IF he cannot find someone to buy them he will give them to the renters or sell with a rent credit of very small amount because of the Franklin crap thing. The repairs will make you have additional night mares and then you will start to find someone to give them to. I know of lots of cases where the owners just walk away from them or tear them down.

This is a terrible deal for you.

(If you still want to buy them after checking and listening here then send a message to me and I will tell you  how to buy them without getting hurt very much., However I suggest you go to the site I told you about and get the answers there.

I've done a deal just like this.  I still have the homes, and its a good money maker.  The numbers are deceptive though.  Maintenance can be high.  Expect to net $100/home/month.  The only real problem I see is the price.  Its nearly double what it should be.  Bulk MH deals can be great money makers.  The only way to make it work is to only pay $100/month/unit.  That will leave $100/month for maintenance, and $100/month for you....assuming your average MH rent is $300, not including lot rent and assuming you manage them yourself.

as he said the homes are between 1990 and 2000 models, so they are worth more than $5,000 each. They are already in place with renters with avg rents of $550. Some people don't read the originals posts very well. 

I think the homes are a little expensive. Maybe you could get him down some on the price. With financing offered, I think I'd be very interested in this deal, just at a bit lower price. 

True, you can get homes cheaper sometimes, but not always and it takes a lot of looking and hard work. 

I'd want a lease agreement with the park owner locking in the lot rent as well. 

In my opinion you need to figure out what the actual value of each mobile home is and then offer a percentage of that.  I don't think that you would be able to quickly wholesale these at $13,500 each.  Year, size, number of beds and bath rooms, condition, location all come into play.  Looks like a bad deal to me.  

I am wondering what your experience in running a mobile home park is?  My understanding is they are very lucrative but high demand tenants.  If you become overwhelmed and walk away you are out your 10%, he retakes the property, and starts the cycle again.  Seems like a great way to make a lucrative park more lucrative.  

Also, how about negotiating a "buffer period" clause or "training period" prior to closing so that you can build a repore and see how he runs the parc.  Kind of like when companies have mergers?  It may help you get a better understanding of his intentions and how the parc runs; and give you an out if you decide against it.   

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