Mobile home keep or sell?

Question

Hello, first time posting and have been reading a lot on these forums and will continue to do so.  I closed on  a home earlier this year. I bought it for 87k and put down 20% So my cash and borrowing is over for awhile.

Now I do have another property which is a double wide mobile home which I still owe 22k on and have rented it out for the last few years at 450 a month.  My question is this, Im eager to buy another brick home to rent out, so should I try to sell my mobile home or work my butt off and pay the note off so I can purchase something else?

William Pickett · Answer

Been a long tome posting but been reading these forums and blog post almost everyday.  I have the opportunity to purchase the land beside mine for I think around 10k. This is a rental mobile home that I do own the property of.  If I purchase the land it will make the entire land there about 2 acres.

I currently rent the mobile for 500 a month. The land would not raise that but If I ever sold I believe it would raise its value.  Also the lot may include a spot that had a mobile on it that does not have one currently. I thought of buying a cheap mobile and putting it in the spot then renting It out.. Just wanted to throw this out there and get some ideas from others..

Thanks!!

William Pickett · Answer

Thank you all for the replies, I have found out I owe 21k at 9.875%..  Im going to keep it rented out and pay it off.  I have pretty much fixed everything on it so might as well keep when it is paid off.  Curently rented for 450 a month.

Just will have to wait before I can buy something else.

Colleen F. · Answer

Noting that you say you owe 23 and it could sell for 25 or 30 calculate in the selling costs before you decide to sell. Also subtract off the real estate agents estimate on how much it will sell for, they always overestimate at first. Not sure how much to subtract but you need to assume a bit less of a rosey scenario on selling just to be sure.

Bill W. · Answer

"This statement is too broad and inaccurate."

Tom Goans, could you expound on this or give some scenarios that he could expect might not lead to depreciation?

Tom Goans · Answer

This statement is too broad and inaccurate.

Bill W. · Answer

When trying to make the determination, I would consider the advantages/disadvantages of the land and mobile home separately as well as the opportunity costs.  Make your best determination on whether the home will appreciate and how much.  For the home, it will only depreciate and it will have more maintenance expenses the older it gets.  Weigh those two together and see if the $450 a month is worth it to ride that out.

I imagine it is close either way.

Tom Goans · Answer

William Pickett,

This longtime investor puts a greater priority on cash flow, especially established cash flow. So do lenders.

With that said, don't get in too big of a rush to accumulate more debt and get rid of a cash flow stream. One is a known, the other has many unknowns.

Consider using the actual cash flow to expand your investments and potential cash flow, not the property.

Just my opinion. I am very conservative.

William Pickett · Answer

The mobile home is a 90 model, I have done upgrades and repairs over the years. It was my home for 3 years. rented for 5. left empty for a couple cause I was dumb.

Metal roof 2 years old.  Laminate floors in living and one bedroom.  Both bathrooms floors replaced and upgraded. New air unit installed few months ago.  Virtually needs nothing except uunderpinning.  Sits on a quarter of and acre which is also mine.

tax card is for 18k currently owe 23k , land and mobile together.  Pretty sure bank will finance getting approved now.  In this market and area I believe it might sell for 25k or 30k.  Am going to call my realtor this week and get a rough estimate.

I just cant decide, I would pay it off earlier and keep if it is going to make me money. Trying to grasp investing and my future, so far what I have read and talked with others real estate is the way to go.  I am too stubborn to give up..

Thank you all for your help!!!

Bill W. · Answer

William Pickett

Could you tell us a little more about the double wide?  Is the home on land and is that included in the $22k you owe?  What year is the home?  What do you realistically think the home (and possibley land) is worth?

If there is no land involved, financing will be difficult at best so you might have to hold out for a cash buyer since you're trying to pay off the loan completely.

Jon Klaus · Answer

If it is on its own land, you might consider keeping it and paying it off. If it is just the MH, I wouldn't keep it long term as it will eventually be near worthless.