Cash Flowing single wide valued at over 300k
Investment Info:
Mobile home buy & hold investment in Durango.
Purchase price: $125,000
Cash invested: $29,000
Abandoned REO foreclosure single wide on a mostly steep 3 acre lot in a great location. Aesthetic issues and tough to finance.
What made you interested in investing in this type of deal?
It was near my personal neighborhood and had been sitting for a while. I knew I could work on it easily being so close and keep an eye on it if I turned it into a rental - which I did.
How did you find this deal and how did you negotiate it?
I found it on the MLS and made a low cash offer with my agent which was initially ignored. The asking price kept going down as it went in and out of contract about 3-4 times over the course of summer and fall. Eventually, the price dropped down low enough that it is was close to my original offer. I resubmitted my original offer and it is was accepted.
How did you finance this deal?
I used short term private lending for the initial purchase. Then I got renters in it and established 6 months of rental history before I switched to a portfolio loan from a local bank. 5/1 ARM 15yr commercial loan 65%LTV.
How did you add value to the deal?
I was able to confidently take on the risk of many of the unknowns that come with an REO foreclosure. Just to get the heat, water, gas and electric back on can have a lot of unknowns involved. I also fixed a few frozen pipes and did a major cleanup too but mostly surface. I also repaired and resurfaced the decks and put on a new roof.
What was the outcome?
Outcome was a low money down purchase with a huge equity gain and a cash flowing rental.
Lessons learned? Challenges?
Be persistent and keep track of the house/projects you look at. This deal took me about 6 months to get my original offer accepted. When the day came I was ready and had an offer within hours of it hitting the market (for the 4th time). I thought I would have less money down on the refinance but the LTV offered was only 65%. I was disappointed I had to tie up 20k in the purchase but a higher cashflow and a stronger equity position isn't the end of the world. Still happy with the deal.