Newbie needs help analyzing a mobile home!
Hey everyone,
Before I describe the situation, I'll tell you a little bit about me. I am completely new to real estate and real estate investing. I've never even bought a personal residence. I feel like I've done enough "educating" at this point though and I'm ready to start learning-by-doing. I started my efforts this week by calling homeowners who posted ads on Craigslist to see if I could find anyone really motivated. After a few phone calls and a few emails, I think I found one. And his property is a mobile home.
I've set up an appointment with him to view it on Saturday, but I wanted to get your thoughts on the situation beforehand so I go in with a good strategy (and avoid any major mistakes).
Here are the facts:
location: Virginia (40 miles south of DC. Near Quantico, which is where many of the park's residents work/worked)
Home description: 2bd/1ba, kitchen, living room, parking for two, shed/storage garage in back yard
condition: needs work (his last tenant beat the place up -- tore up carpet, broke window, stole fridge, maybe other problems too)
rent: $400/mo (to be clear, this home does NOT come with land. The owner pays $400/mo to the park manager to keep the home on the lot)
He claims that he has been able to rent the home for $1,000/mo before. That seems hard to believe, but I've not been able to get any professional opinions yet.
Situation: The owner is pretty strapped. He doesn't have the cash to fix the place up to re-rent it, so he needs to sell it "as-is." He's working a few jobs to make ends meat, but his bills are mounting and needs to sell this thing.
His ad listed the price/terms as follows:
$60,000 purchase price, 10% down, $500/mo thereafter until the home is paid off (no interest)
When I got him on the phone, he told me he was offering $0 down, no payments for first 3 months, and $200-$300/mo thereafter (this was unprovoked by me, I didn't even ask him to confirm the price).
So my question to the community is really pretty simple: WHAT DO I DO??
My initial thought was do some kind of rent-to-own, where I pay the lot rent of $400/mo, his monthly payment of approx $300/mo, then try to rent it for $900-$1,000/mo and keep the difference.
But then when i really think about it, I don't want to be dealing with this home and its tenants (or this guy) for an extended period of time. It's an hour away from where I live and it just seems like it'll eventually be more work than it would be worth for that kind of arrangement.
So what about wholesaling it or rehabbing it? Does anyone have thoughts on this? Do rehabbers buy mobile homes from wholesalers?
In terms of next steps, any thoughts on the following issues would be sincerely appreciated.
1. Valuation (how do I estimate the ARV of this place)
2. Negotiating the deal (what do you think the best negotiating strategy here is? He's asking what seems like a high price ($60k) but also offering very good terms ($0 down, low monthly payment, no interest). Maybe if I offer him all cash, I could get a great deal?
3. exit strategy (what would I do with this thing??). I'd love to find a way to make a quick buck and NOT tie my money up in it long term.
I know this is a long post, but I felt like I needed to communicate all of this to give you guys a clear picture.
Any and all thoughts are welcome. I'm sure there are things I've completely neglected to consider which I'm hoping someone will point out!
Look forward to hearing what people have to say.
Thank you,
Dan