Investor · Cary, NC · Member since 2008 · 218 posts · 29 votes
Looking into buying a cheap (5K or less) lot here in NC in a small town within 20 miles to a major city (Raleigh,NC). My plan is to find a cheap mobile home (5k or less) and having it moved onto the lot. Would have to add septic and water (well) and have priced that out to about $10,000 for both. I'm hoping to be all in for around $20,000 total.
My plan would then be to sell the house on owner financing/rent-to-own and then eventually just charge a lot rent. Do this, rinse, and repeat.
I know most people are traditionally looking to do either Lonnie Deals inside an existing park or owning the parks themselves. Curious to know if anyone is doing this particular strategy? Buy cheap land, move a cheap mobile home onto it, sell it via owner financing and then just rent the dirt...
Houston, TX · Member since 2015 · 512 posts · 338 votes
8y
I did one last year in a small town of 500 (no zoning ordinance) with city utilities. Here is how it looked:
Land - 6K (from a direct mailout)
1999 76x16 - 3K
Move and setup 150 miles - 4K
Water / sewer taps - 2K
Porch - 1K
New 3.5 Ton HVAC - 3K
Home Rehab - 15K
I was all in around 37K, then Seller Financed for 50K over 10 years. It's working out well and the monthly payments are basically the market rent rates ($750 per month). In my case I retired the mobile home title to the land. I thought about lot rent but it's a weird model when it's just one lot. The land is what makes these deals desirable for buyers.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Alex Locklear Developed lots have been on my radar for awhile. Just haven't come across anything worthwhile yet. As far as land, I prefer something developed versus not developed. If you plan on moving a mobile home on the land, just be sure you've checked everything with zoning. Sometimes it takes awhile to get to know the folks in government to get things done. Good luck!
Houston, TX · Member since 2015 · 512 posts · 338 votes
8y
I did one last year in a small town of 500 (no zoning ordinance) with city utilities. Here is how it looked:
Land - 6K (from a direct mailout)
1999 76x16 - 3K
Move and setup 150 miles - 4K
Water / sewer taps - 2K
Porch - 1K
New 3.5 Ton HVAC - 3K
Home Rehab - 15K
I was all in around 37K, then Seller Financed for 50K over 10 years. It's working out well and the monthly payments are basically the market rent rates ($750 per month). In my case I retired the mobile home title to the land. I thought about lot rent but it's a weird model when it's just one lot. The land is what makes these deals desirable for buyers.
Investor · Cary, NC · Member since 2008 · 218 posts · 29 votes
8y
Nice Jeffrey. My plan would be to sell the mobile home on owner financing but just the mobile home; not the land it sits on. After the MH is sold I'll just charge a lot rent at that point and own nothing but the dirt.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Alex Locklear Seems like you'd get good returns for the duration of the Rent to Owner Period, but have you modeled out if the lot rent alone would cover Taxes, Insurance, and Maintenance?
My gut tell me that once you sell the home, your revenue goes down, but most of your expenses stay the same.
Also, I think you'd have a pretty small buyers market if you wanted to exit for such a unique asset.
@Alex Locklear Seems like you'd get good returns for the duration of the Rent to Owner Period, but have you modeled out if the lot rent alone would cover Taxes, Insurance, and Maintenance?
My gut tell me that once you sell the home, your revenue goes down, but most of your expenses stay the same.
Also, I think you'd have a pretty small buyers market if you wanted to exit for such a unique asset.
Bill, as the land sits now (obviously there isn't a MH on it yet) the taxes are about $150/year. Not sure how much that would go up once there's a mobile home on the land. As far as insurance, I haven't gotten that far yet, but my guess/hope is that since I already have a general liability policy that I keep open year round for my house flipping business that I'll just be able to add this property onto that policy. Once the seller buys on owner financing, they'll be responsible for the maintenance on the MH itself. I would be responsible for keeping the grass cut, etc.
The taxes will go up once you improve the land (add septic, well, drive way, electrical, pour a pad...ect). Insurance not my wheelhouse, but it seems risky to have a property with tenants that relies on a general liability policy.
Since you won't tie the home to the land, the MH is still chattel and you'll pay taxes on the home and land until you complete the rent to own.
However, to me the largest risk in the plan is the exit strategy. I can't see a large market for a semi improved piece of land with a MH you don't own on it. The vacancy risk post MH sale (either having to take back title for non payment on the MH or find a replacement if they pull their trailer) makes the juice not worth the squeeze to me.
I was all in around 37K, then Seller Financed for 50K over 10 years. It's working out well and the monthly payments are basically the market rent rates ($750 per month).
For me, that doesnt seem like enough of a profit or cash low for tying up $37,000 of my cash.
Houston, TX · Member since 2015 · 512 posts · 338 votes
8y
@Eric James Everyone has their own definition of a good return. I can sell my seasoned note in a few months for 65-70K. What kind of deals are you doing?
@Eric James Everyone has their own definition of a good return. I can sell my seasoned note in a few months for 65-70K. What kind of deals are you doing?
For a 10 year $45,000 loan at 10%, the total amount paid is $71,000. What kind of interest rate are you charging to sell these for $70,000?
@Eric James Everyone has their own definition of a good return. I can sell my seasoned note in a few months for 65-70K. What kind of deals are you doing?
For a 10 year $45,000 loan at 10%, the total amount paid is $71,000. What kind of interest rate are you charging to sell these for $70,000?
Since you don't have anything to contribute to this thread, I'm not going to spend time picking apart my deal and your assumptions.
@Eric James Everyone has their own definition of a good return. I can sell my seasoned note in a few months for 65-70K. What kind of deals are you doing?
For a 10 year $45,000 loan at 10%, the total amount paid is $71,000. What kind of interest rate are you charging to sell these for $70,000?
Since you don't have anything to contribute to this thread, I'm not going to spend time picking apart my deal and your assumptions.
I'm not trying to knock you. I'm interested a way to make money on mobiles, but owner finance doesn't seem to fit what my goals are right now. Hope it' s working out for you.
@Eric James Everyone has their own definition of a good return. I can sell my seasoned note in a few months for 65-70K. What kind of deals are you doing?
For a 10 year $45,000 loan at 10%, the total amount paid is $71,000. What kind of interest rate are you charging to sell these for $70,000?
Since you don't have anything to contribute to this thread, I'm not going to spend time picking apart my deal and your assumptions.
I'm not trying to knock you. I'm interested a way to make money on mobiles, but owner finance doesn't seem to fit what my goals are right now. Hope it' s working out for you
That's cool I am open to a healthy debate about the model. The same 50K home I sold would be 100K if it were in Dallas or Houston city limits, but your costs for the land would also be higher, and the labor (potentially) more expensive, and then zoning / city ordinance restrictions come into play which can prevent moving. Some of these Florida and California markets can sell a home in a Park for 150K+. I have not seen that happening in our markets.
You can probably have higher margins wholesaling but that's a completely different type of hustle that I don't like. What options are you considering in this segment?
Rental Property Investor · Bandera, TX · Member since 2017 · 148 posts · 56 votes
8y
The zoning in a city and subdivision restrictions have been our biggest hurdle on this very issue.
We have a double wide we want to move to a lot and dig well & septic but keep running into “no mobile homes allowed “