Is this a Good Deal!

6 Replies

I have a deal that I think is a good deal. I have analyzed this deal already. 3br/2ba mobile home in Arizona, purchase price: $40,000, estimated repair cost:$0.00 (Home has already had all repairs done), ARV: $ (I didn't know how to come up with that amount since no repairs are needed)but I was thinking maybe $60,000, Monthly P&I: $246.05, Monthly Tenant Rent: $1,200, Landlord Monthly expense: $552.05, Monthly Cash Flow: $647.95, Cash on Cash ROI: 55.03%......Is this a good deal to buy & hold? If so whats my better choice with financing it Bank or Hard Money Lender? Help I don't want to lose this deal???

Hey Olivia,

It's important to find the ARV, because you don't want to be buying the property over the ARV price if no repairs are necessary. I find the ARV by looking on Redfin at sold properties within the last 6 months, within close proximity to the subject property. Find a similar style home if possible, along with close sqft and bedroom/bathroom count.

If you have not already: I would include agency costs (if any), utilities if the tenant is not paying them, vacancy rate costs, and also some future maintenance costs. Once you do that I would re-approach this!

That deal currently sounds like a great deal, but I would add the expenses I mentioned and see how that effects the numbers. 

As for the financials, I would contact local Hard Money Lenders and compare their terms to the banks.

Let me know if you have questions!

Yes, Etienne, I have already included the Landlord, vacancy, cap, and repair expense in my calculation.

But I will do my research now on finding the ARV price and get back to you on it.

Thank you for responding!

@Olivia Darling Also consider mobile homes on rented land only depreciate in value in general. They may cash flow well and that is where they derive value for the investor.
Are you sure you have all expenses figured? They seem awfully low. $250 P&I, plus $240 reserves for vacancy, capex, and maint (roughly 20%) already put you at $490. What about pad fees (is it not in a park?)? Around me a decent park charges $500/month for the pad.

@Olivia Darling I would echo what @Etienne Martel said in doing your own DD to verify the ARV first to determine if it's a good deal. You want to look at closed comps within the last 6 months if you can (Can go out to 9-12 months if no sales recently) within ~1/2 square mile of the subject property and not crossing any major roads. You can use something like redfin or you can also ask an agent friend to comp it for you using ARMLS

As far as financing is concerned, hard money could be a good option, especially if you find one that has a temporary to permanent option (Starting out as a construction loan, and then using a preferred lender to refinance out into a conventional once the construction is done). Although with this needing no rehab you may not want to go hard money so I'd do more research on that front.

Good luck! Looks like great cash flow property on paper.

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