Help analyzing first deal. What am I missing?

4 Replies

Hi all,

I put a "we buy houses" ad up on craigslist the other day and got a call today from someone who wants to sell a MH on 1/2 acre. I've never done a MH deal and it's been a while since I've read "Deals on Wheels" so figured I'd come here for some advice.

What I know:

1993 MH, 16x80, on half an acre. Needs work, but has new flooring, vinyl siding and shingle roof.

Is not in a park, but what used to be a park. Kind of a modular subdivision now. Lots of MH, etc., but no lot rent.

On city water, but has a septic tank.

Seller is relocating to Florida and wants to sell fast. Her ex-husband offered to buy it on a contract from her, but she wants cash now. I'm thinking about just playing the bank on this one.

Asking price is $10,500, but that sounds negotiable based on her motivation. I haven't talked to her ex-husband yet, but she said he offered $15k on contract ($500 down and $250/month + potential lump sums at tax refund time).

The MH is about 90 minutes from where I live.

Thoughts? What other questions should I be asking? What risks do I need to plan for up front?

I would start at 5K cash. I would explain in order to rent the property/sell it it has to be repaired ect... Explain that banks don't loan money on mobile homes after a certain year. Mobile homes only around here are going for 5K-6K so what is the land worth to you? Here I can get an acre of land for 10500

Mike, what is the property worth? You really need to determine the market value of the place. Certainly don't rely on what the seller tells you she got offered through someone else. And don't count on reselling it to their phantom buyer as your exit strategy. I would determine what you can sell the property for, what amount of profit you'll need and make an offer based on that. Also, I'm unclear as it wasn't explicitly stated but it sounds like the house comes with the land, that correct?

I was able to talk with the ex-husband. He's interested in buying on contract with the following terms:

$500 down + $250/month. $5k lump sum payment in April (from his tax return), then drop monthly payments to $150/month. Another $5k lump sum the following April, continuing with $150/month until total payments = $15,300.

That's what he offered; I didn't suggest it. The lump sum payments would be great, but seem overly optimistic in my opinion.

The MH comes with the land. From what I gather ,it's not worth much. The ex-husband mentioned a flood of some sort and that there was no drywall or flooring. He's willing to do the work to fix it, but from my perspective it looks like I'm just buying a 1/2 acre of land. I'll do some diligence to figure out what that's worth in that neighborhood.

I'm also considering making both contracts (buy and sell side) contingent on each other. i.e., the deal doesn't go through unless all parties agree to the terms and everything gets signed at once.

With a $5-7k purchase price, and the proposed exit, the ROI is great. (Assuming the contract doesn't default, of course).

Hi @Mike Knowles

Congratulations on being proactive enough to place a small and free ad on Craigslist to see what you stir-up. The deal is certainly worth looking at further.

It sounds like your exit strategies are normal enough (cash or payments) so I will speak to you based on this.

If you haven't seen pictures of the home then ask the seller to send them over asap via email. If she can not then go out there at your next free time, preferably after the next big rain storm. Depending on repairs-needed will determine your interest level unless you would like to pursue moving a newer MH onto the land. The mobile home is relatively new and a good size from your previous post.

Also important to ask or note:

1. Is the location very rural or suburbs of main city?

2. What else is for sale nearby?

3. # of beds and baths?

4. Is owner currently loving there?

5. What can you sell for monthly?

6. Why no financing? Even with money down? (Persistence often helps)

I would advise to pass on the husband living there. If the wife doesn't want to work with him you may not wish to either, however a background and credit check will bring his history to light.

Hope this helps you out. Happy to help further. You can email me personally if needed.

Best,

John Fedro