Goshen, AR · Member since 2017 · 267 posts · 159 votes
All,
@Henry Washington and I come across mobile homes on 1-5 acres pretty regularly. They are usually 15-20 minutes from town and in need of some repair... We can usually pick them up for what the land it worth or a little below. Example: 5 acres in a decent area 15 minutes from town, 5 minutes from lake, with a mobile which needs $10K in repair can pick up for $35,000-$40,000. We are trying to find an outlet or an option for these that works... So far below is what we have come up with...
1. Tear down and market land - It doesn't make sense as there's a lot of risk (carrying costs) and very little payback.
2. Rehab and rent - again doesn't make sense as $600 is top end for rent which could be OK but your pool of renters is very narrow.
3. Assign it to someone who knows what to do with it???
I know this seems pretty broad but someone out there has had to have been through this same dilemma... Thoughts?
P.S. Please ask any clarifying questions, I'll answer to the best of my ability.
Houston, TX · Member since 2015 · 512 posts · 338 votes
8y
I have done this a few times.
The exit strategy is fix up the mobile home and owner finance it. But with your market rents so low you need to be careful how much you put into the home and land. A singlewide on 1-2 acres given your market rents you need to be probably 30K all in, and could then sell for 50K on a note and collect interest. A doublewide would give you better cushion, but still need to be around 40K in that scenario. You'll want to escrow insurance and property taxes and try to get the payments around $650 total so that you're competitive in the market. This means you're going to have to do some 12-15 year loans to get there (assuming a 5K down payment), and not sure if that meets your investment criteria.
I'd try to find properties a little closer to town where the rents are marginally higher in the $700+ range, but that's just me. Good luck.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Dustin Davis Depends on your exit strategy. If the pool of renters is very narrow, you may need to go a different route. Try to talk to some of the mobile home dealerships in the area to get a feel for the market. They may just have a few referrals of people and/or customers looking to buy land or want land to put their mobile home on. Another option is to talk to the owners of the adjacent land to see if they're in the market to buy and add to their own land. Good luck!
Houston, TX · Member since 2015 · 512 posts · 338 votes
8y
I have done this a few times.
The exit strategy is fix up the mobile home and owner finance it. But with your market rents so low you need to be careful how much you put into the home and land. A singlewide on 1-2 acres given your market rents you need to be probably 30K all in, and could then sell for 50K on a note and collect interest. A doublewide would give you better cushion, but still need to be around 40K in that scenario. You'll want to escrow insurance and property taxes and try to get the payments around $650 total so that you're competitive in the market. This means you're going to have to do some 12-15 year loans to get there (assuming a 5K down payment), and not sure if that meets your investment criteria.
I'd try to find properties a little closer to town where the rents are marginally higher in the $700+ range, but that's just me. Good luck.
Investor · Boyd, TX · Member since 2014 · 688 posts · 467 votes
8y
This is my specialty, but I just wish I could find your prices in the North Texas area. We haven't seen that low since about 2014. I just got outbid on a 1997 double on two acres that needed about $20k in work. It went for $70k cash. Market rents on a 3/2 on an acre are about $900-$1000. Retail price is $100k-$130k.
Goshen, AR · Member since 2017 · 267 posts · 159 votes
8y
@Jeffrey H. very good points here... One issue is that we don't want to park money yet. We are BRRRRing everything we get for the time being... This may be a good strategy in the near future when rates go up. Thank you for your input!
@Paul Ewing come on up to Arkansas! There's a ton of them up here still, and we'd love to partner on something!
My wife and I have a lot of ties to Texas and have been looking at buying down there but prices everywhere in the state are unreal. I'm curious to see what happens when the interest rates continue to rise. I'd love to find something on 15-20 acres around Kerrville, Fredericksburg or New Braunfels. Even shells that haven't been lived in for 20 years are getting $100 sqft. If you come across something send it my way. ;o)
Real Estate Investor · Great Falls, MT · Member since 2017 · 88 posts · 46 votes
8y
Hard to see the appeal. Especially when you compare this investment to mobile home parks, or even just mobile home Lonnie deals. Have you done a market cap or COC analyst?
Attorney · Cabot, AR · Member since 2016 · 130 posts · 39 votes
8y
You probably already know this, but just an FYI: in Arkansas, mobiles homes are considered personal property not real property, unless certain steps have been taken.
Be sure that the mobile homes are included with the land (and don't have separate mortgages).
Goshen, AR · Member since 2017 · 267 posts · 159 votes
8y
@Deborah Hardin yes this is known. We always ask for a title that matches the plate or a bill of sale if we were to purchase. Thank you for bringing this up.