Hello bigger pockets community!
I am a new member to this site although I have been utilizing it along with most of the podcasts for several months now. What an excellent community of like minded individuals. I am new to real estate investing and have not made my first purchase yet, outside of my primary residence. I reside in Fishers, Indiana which is just outside of Indianapolis. I am currently employed full time and have a wife and young son at home. I am super excited about my journey into real estate. So I have been tossing around several ideas over the last couple of months and think I have a direction I would like to pursue and would love feedback from anyone willing to do so.
My plan is to pay cash for land with a mobile home on it, do some slight repairs/renovations then sell the home with seller financing while still maintaining ownership of the lot. I am thinking that my main target would be REO properties that I could purchase for no more than 20k (including land/MBH/repairs), then try to achieve a $600 monthly payment (for both the home and land rent).From just looking around on a few sites, there seems to be no shortage of these in some of the rural areas in Indiana. I think I would be willing to go at least in a 50-75 mile radius from where I live to acquire these properties. A few issues that I am trying to think through are: What would be an appropriate lot rent for the land? I think my plan would be to take the $600, then back out the lot rent to obtain the payment on the MBH. Also, what is a fair rate to charge for seller financing? Would a $1,000 down payment seem about right for these types of property? And lastly, how do I know what to sell the home for? Since I will be purchasing both the home and the land together I am curious as to how to determine what the value of the land is vs. the value of the MBH.
Sorry this drug out a little longer than I liked, but I wanted to make sure I am covering all my bases.
Thanks and look forward to hearing from everyone!
@Mark Hull Hi Mark and welcome to BP. It is such a great place for everything. In your scenario there is a lot of different variables. I think you should check out your area or the areas that you might be buying some of these homes in. See what other mobiles homes are selling for, see what the lot rents are going for as well. The lot rent price can vary a whole lot. Along with lot rent , see what if it includes anything like garbage, water, sewer, etc. That should give you an idea of the local market.
If you are buying mobile homes on land, you need to see if it the mobile homes have titles or if they were given up and made part of the real estate/land. That will affect you selling just the homes to an end buyer. Some states I think you can get back the actually title to the mobile home and then you can sell it to someone. As for a price to charge for the rent, I would again check the local market for rents and I would think you might be able to get a little higher price on your land because it appeals better to people because it is not in a park.
As for selling to the home to the a buyer on payments. You are going to have to decide if you are going to comply with Dodd Frank and the Safe Act. Some people will not worry about it and just sell on payments anyway. But in any case it is something you should read about and check into if you have not done so already. About the down payment, I think $1000 down might be a little low. Around my area you can easily find people willing to give to $2-5K down. To figure out the payment you would need to figure out how much you want for the actual home and see if some numbers work. I would have to total price stay close to what the rents are in the area or maybe a little higher because they are buying the place. If you go that route I would make sure the lot rent is totally separate from the house payment. Have a separate lease agreement for the renting of the lot and then something for the actual home.
You might be able to look up the land values with the treasurer. Also doing comps vs other parcels of land to come up with some value number. I would sell the homes for what comparable ones in the area are going for. There is a lot of variables to take into consideration. Good Luck in your new venture.
Originally posted by @Mark Hull :
Hello bigger pockets community!Hi Mark and welcome.
Check on the blogs here for a ton of info on mobile homes on land and in parks.
Check your state's rules and regs, contact a title company or atty for the correct process. As Mark above mentioned get familiar with Dodd Frank requirements. Do your due diligence and jump in.
I like to buy when people HAVE to sell, not when they WANT to sell. That is, don't buy when they first list the house. Buy when they are tired of listing it and ready to move. Much better prices. You will lose some deals but get a better bang for your investing buck.
Welcome and good luck!
@Mark Gruetzmacher thank you so much for your input on this. Yes, making sure the title is retrievable will be key for the financing piece of it if there is not one available. I really would like to own the land regardless if they pay off the home. Also great advice on keeping the lot rent separate from the the lease as to make clear the distinction from the two. Have you done many of these types of deals? I am also wondering how to structure the lease the best for easiest way to get property back if default. Thanks again!
@Bill Neves thank you! Any advice for getting deals outside of MLS? on the MLS do you just look for the longest listing timeframe or just make lowball offers on many letting them know you are a cash buyer and ready to move on it? thank you for your response on this!
Good to track time on market. You can use that as justification for lower prices. Also carrying costs, repairs, etc.
I've used MLS, Craigslist and MHVillage. BUT.... the most productive deals for me, have occurred driving parks, meeting park managers and owners. Start a dialog with sellers, be friendly and stay in touch so they call you first when they are ready to sell.
I've done deals from referrals, realtors, marketing with mailers, etc. The most productive deals have been 'belly button to belly button' negotiating with sellers.
There are tips and tips but no shortcut to success. Takes a lot of work.
Book 1 - Tom Hopkins - 'How To Master The Art of Selling' and 'Selling for Dummies' from the Dummies books series. Hopkins is in the Guinness Book of Records. Sold 365 houses in 1 year.
Favorite question to ask when someone gives me a number: "Is that the best you can do?" Have to practice that one so it's friendly, never confrontational.
Book 2 - Napoleon Hill - 'Think and Grow Rich' on goal setting.
Knock it out of the park!
@Bill Neves thanks so much for all of your great advice. I really appreciate it!
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