Deal Analysis: Manufactured Home in North Carolina (NC)

4 Replies

Hi all, this will be my 4th deal in 1 year and it is the first time I have posted. This will be my first manufactured home and I want to ensure I am not paying too much. My strategy is buy and hold. This will be a cash purchase. It is a recently rehabbed manufactured home on a cement foundation. There are similar homes around it. Its not a great area, but it is extremely close to the gate for the local military base in Jacksonville, NC. My biggest concern is that the house is a bit old. Everything seems in good shape from visual inspection, and the previous owner removed unsightly wood panneling, repainted, added new carpet and flooring and upgraded some plumbing. It has central air.

List Price: 49,900 (looking to negotiate closer to 45,000 with closing costs)

Monthly Rent: 700 ($50 below market rent to fill fast)

Vacancy: -70

Management: -70

Taxes: -37

Insurance: -59

HOA dues: -10

Maintenance: -100

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Monthly cash flow: $354

Annual cash flow: $4248

Cap Rate: 9.4%

Comps in the area for mobile homes are in the 30k-60k range. This owner purchased the home as a foreclosure in Jan 2012 for $25,000 and rehabbed it. This market is a little funky because it stayed flat in 2008-2011 because of strong military demand, then started to decline in 2011 because of force cuts.

Thanks for the input.

@Michael Stroup

Couple of questions/comments to provide better feedback:

1. Based upon what you said this must be on its on lot versus in a park, correct? What is the land value?

2. How old is it? How old is the roof and HVAC?

3. City water & sewer?

1) On its own land. Value unknown.

2) Home is 25 years old. Roof and A/C unknown age at this time, but appear to be middle of lifespan to slightly old. I forgot to check age of A/C, and will do that next time I visit the property.

3) Yes, city water and sewer.

For education sake, how would differences in these items affect your analysis of the deal? Obviously septic tanks are expensive to repair, old A/C and roofs need to be replaced, etc. Anything more complicated than that? Is $1000 per year of that annual cash flow enough to set aside for capital improvements for a house of this age in your opinion?

Hey Michael,

Congrats on the deals you have done! I am very familiar with the area here in Jville. I would be a little concerned with the age of the home for that price. There are several deals around the area that you can get for similar price and much better homes, such as town homes, duplex's, etc. I would probably steer clear of this deal and maybe look for a little better one. If you need any help with finding something just let me know. I wholesaled 2 SFR in Jacksonville last week one with an ARV of $115,000, repairs of $8K, in good area of town. One of them sold for $54,000 and the other $52,000. Yes, it a little bit more money, but they are a much more solid and stable product.

Best of luck,

Jim

Here are some pics of those wholesales so you have some idea.

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