How to calculate the value of mobile homes
My cousin found a mobile home which seems like a good investment. The guy wants to move out of America back to his country and he is also behind on his mortgage payements so he's quite motivated.
Its in Florida, Lake Worth; a 4 bedroom mobile home which he originally bought for 80k and he's selling for about 55k. At first when I saw these numbers my jaw dropped.
My cousin says you can rent places out for about 600-800/month with a 5% vacancy rate. Only rehab expenses are a broken window and painting the ceiling, he also just recently replaced the roof.
According to my cousin expenses a month will be about 500 a month + 1000 a month to rent the land, so we're looking at about 1500/month for monthly expenses and its all cash buy.
I looked up the cap rate and its about 7%.
With all this information I get a NOI of about 13,920 and if you divide that by the cap rate you get the value:
13,920 / 0.07 = 198,857.
We can also calculate the ROI: 13920 / 55000 = 0.25
So in conclusion I've calculated:
NOI: 13,920
ROI: 25%
Value esimated at 198,857 (Hes selling for 55k and bought it for 80k)
These numbers are unhead of and I don't know whether to be super excited or super confused here.
I've done some research and realized the biggest drawback to mobile homes is it's susceptible to storms since there's no foundation and you have to pay to rent the lot out. But jesus, with these numbers I would think ANY mobile home is a good investment, they usually go for about a third of a house and you make your money back in less than 10 years - An average mortgage is about 30 years! On top of that, I did a quick google search on life expectancy of mobile homes and apparently they last about 30 - 55 years!
Am I missing something here? Why isn't every single person not investing in mobile homes?