How much to offer on Mobile Homes?

Question

Amisdt marketing for SFR, two very motivated manufactured home sellers appeared (a good problem)? One in an all age community, one in 55+. I've met with the 55+, property needs flooring and a little paint. All age says, brand new. My initial exit was to wholesale both.  Which leads to my question, How do you determine your offer on Mobile homes? You don't know what you don't know, but I hope this question makes sense.

Howard Grant · Answer

@Rachel H. Thank you for the really good feedback. Talking to park managers/ or owners is really where I'm going to get my answers. There are hundreds of parks in my marketplace. Getting my name out there is the best step for me right now. My mind is stuck on understanding the process, so at first I will do the work myself. Thank you for the feedback, the information you are sharing is providing a lot of clarity.

Rachel H. · Answer

If you're wholesaling, you'll need to know the market value for each exit strategy (i.e. cash, payments, etc). Regarding fix up work, it'll take some time to get to know the contractors in the area who specialize in fixing up mobile homes. They can give you some good estimates and opinions on your projects.

Each investor is different. Some like to hire the work out while others will do the majority of it themselves. These are all factors in determining value.

If the home is in a park, you may want to talk to the park manager and/or owner. Usually, they'll know what homes can go for in certain conditions. Neighbors are also a good source of information. And lastly, you can always visit your local mobile home dealership. They buy and sell all the time and can help you with your research in the community.

Good luck!

Anthony Dooley · Answer

I would buy and hold if you can. I value them like any other income producing asset, cash flow.  What is an acceptable rate of return after all expenses for you? Whatever that is, divide it into the net income of the property after all expenses including lot rent. That is my max offer not including repairs needed prior to rental. If you are wholesaling it, just offer 50%% of value and sell it for 75% of value.

Edmund Jew · Answer

Hi, I am in contract to purchase a distressed mobile home park. the park has 6 apartments is good conditions. and 33 mobile home space pads. Of the 33 space pads. there are 14 mobiles on the pads. 9 rents for $285 a month. 1 rents for $350, 1 rents for $300. 3 are vacant. So there are 19 empty space pads. 5 out of the 6 apartments are rented.

The total gross income is $4,600.00 a month.

If I Rent the remaining three mobiles and apartment. I think I will have gross rent close to $6,000 a month for the purchase price of $375,000 with 19 empty pads remaining.

The property taxes are $300 a month

The insurance is $250 a month

All the residents pay for there own water, sewer, electricity and trash.

The seller is evicting the handyman and last non paying tenant which is living in a RV.

The park needs a clean up. I figure a few thousand dollars, mainly removing trash and doing landscaping and another $30,000 to make the park shine.

The three empty mobiles needs work. I was planning to sell them for 1 dollar and give the new tenant 1 free month rent while he/she remodels the mobile.

I must remodel one apartment, cost $5,000 to $7,000. this apartment would easily rent for $450 to $500. Again the resident will pay for all utilities.

There is a family park and after school program directly across the street.

The park needs mobiles and trailers to fill the 19 empty spaces. I will use craigslist and make two 4feet by 12feet vinyl banners to advertise under new management and special incentives to move your mobile or trailer into the park. We buy and sell used mobiles and trailers.

Am I paying too much for the park at $375,000?

current gross income : $55,200 x .1 = $552,000 ( is this how it is calculated? )

with $6,000 month income

$72,000 x .1 = $720,000 ?

Am I doing this calculation correct? I did not add the property taxes and insurance?

need opinion. thanks so much

Howard Grant · Answer

Solid answer, thank you Anthony. I've been one dimension in my exit strategy, for a good reason. Your response confirms a question I've been asking myself, "What is the average monthly rent for mobile homes in my area".  I believe If I start there, I can determine my target ROR. I'm a little over month into my career, this is valuable information.

How much to offer on Mobile Homes?

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