(Semi long post incoming.
TL;DR I have an opportunity to rehab several trailers in a trailer park that need extensive work, is it worth it?)
I've been away from biggerpockets for a while because I needed to work on my personal life (finances, credit score, career, etc.) But have continued to browse the forums and listen to the podcasts with dreams of someday being an investor.
I mention that because I kind of "accidentally" stumbled upon a possible opportunity. My wife and I were looking to move and were looking at trailers as a possible cheaper way to live so we could save more money. While speaking with the property manager, he mentioned he has several trailers in the park that they're trying to fix up to sell, but they have too much work and not enough workers. The park is offering the run down trailers for $1000 dollars and 3 months free lot rent to people who want to come fix the trailers. A side note; lot rent at this particular park is $300 a month, so I could essentially get the trailers for $100. There is also another trailer that was inherited by a family who wants nothing to do with it, and has told the property manager they want to give it away. I exchanged numbers with the property manager and told him to send me all the info he had.
That being said, I'm scared hahaha. I made a move because I didnt want to miss out on a good opportunity. A 2 bed 1 bath trailer at this park goes for around $10000. Is it possible to rehab a trailer with a few thousand and have some equity left to make a profit? I'm willing to put in plenty of sweat equity to make it work, but I have no clue how to gauge repair costs for a trailer.
So in conclusion, what exactly am I looking at here? A great way to start investing with no (or low) money down? Or is it a dead end because the costs would be either equal to the ARV or even more?
You can make decent money this way. You just need to know your numbers and have the confidence to push the ARV when possible. If you can find the correct suppliers, sometimes the parts for mobiles are really cheap. Fixing it back up to new is sometimes better than trying to tear into it and upgrade. As long as you watch your costs, you should basically be ok.
Keep in mind this isn't really a real estate deal. It's more like flipping cars. That said, the place the mobile is park is really where a lot of the value lies. If you start fixing up places in one park and making the park nicer, the value of the whole park will start to increase and you'll be able to charge more for your subsequent flips.
I'm my area here, it usually costs minimum of about $40,000 for a ratty trashed mobile in a park just because of where it is. That is to say that someone will buy an old $40,000 mobile, tear it out and put a new one in and still have to pay $600-$900/mo for space rent. I have a friend around here who retired from fixing up mobiles in parks. Sometimes he'd buy a repo out of a park for $25k then move it to another park and put $40k into it. He'd turn around and sell it for $160k.
@Edward Robinson hard to say as I don't know the numbers. Having represented mobile home buyers in the past I can say that the asset class (the mobile home not the park) is wide ranging in terms of how to price it and the investment opportunity. Is the coach (i.e. mobile home or trailer) a single wide? Double wide? Triple wide? Was it built before 1976? Is the park desirable? Are mobile homes selling in the park? Determining the after repair value (i.e. ARV) on a mobile home is much more challenging than a regular home.
As for fixing up the mobile home a friend of mine (who is in construction) says that mobile homes are harder to work with than normal homes.
With that being said this very well may be a great deal you just have to know what your numbers are. It sounds like the park owner just wants his pain to go away maybe their is room to negotiate further? If you go forward know what they are selling for, budget for the repairs, know what rents are going for in the area for a comparable apartment/home and call lenders to see if they would lend on a mobile home after the home is fixed up.
Best of luck and let us know how it goes!
Sorry for disappearing for a while, I'm a truck driver and my app wouldn't let me reply on anything.
I've kept in touch with the property manager and the properties are still available. I have plans to go take a look at their inventory tomorrow (the 31st) and hope to take on one or two projects if possible.
Something kind of cool that's already come of this, I was talking to some good friends about the opportunity, what I want to do with them and what my future plans are if it works out. Turns out one of my friends has experience flipping trailers and the other has money to invest! It blows my mind and it's crazy to think of how this all happened.
I plan to update again in a few days, hopefully with at least one project on my plate. Thanks for the advice guys :)
I attempted to get ahold of the property manager but he hasnt been responding. I can only assume that this isn't going anywhere as I'm not really comfortable spamming somebody with a bunch of messages trying to buy their deal.
However, I have to say I'm grateful to him. He's inadvertently brought me back to my original dream of investing in real estate. I still have a little ways to go in my personal life, but with the help of my friends I had that conversation with, maybe I could make something work.
Thank you guys for the advice, I hope I see you around the forums and that you have a wonderful day :)