The mistake I made buying a mobile home deal
Here is a post that is about a mistake I made that hopefully won't actually cost me any money. Back in May I purchased a property that had one mobile home and 2 empty lots that could accommodate a mobile home each. I had a $75000 LOC and purchased this property for $53000. The property had one septic tank for the mobile home that was on it. The mobile home was set horizontally on the property so it was actually occupying 2 of the lots. I made several mistakes when it comes to the analysis of this deal.
- I didn't think it would cost as much as it did to move the mobile home. I ended up paying $2600 to turn this mobile home 90 degrees on the property. The last time I payed to move a mobile home across town it cost me $500.
- All of the other costs that came with developing the property were higher than expected. Septic systems $3000 a piece. Plumbing installation $2500. Electrical connections $700. To purchase a mobile and move it out to the property I am looking at close to $20000.
-The biggest mistake of them all was the financing aspect. I did not know that refinancing a rented mobile home would be so difficult. I thought once I moved the mobile home I would simply refinance the mobile home and lot, which is renting at $800 per month, and use that money to purchase the next 2 mobile homes and place them on the empty lots. Unfortunately the only place that would do a refi on a mobile home would only do 55% ltv and 8.5% apr. That was definitely not going to work for me. This left me stuck with 2 empty lots, and about $65000 on an LOC.
Luckily there is enough equity in the lots and mobile home to offload them and come away with a little cash in my pocket. I would rather offload these properties and purchase something that I can refinance, rather than be stuck here saving money to place a couple of mobile homes on a couple of lots. I just wanted to share this so that hopefully you won't make the same mistakes as me.