[Calc Review] Help me analyze this deal

6 Replies

@Gary Millar

Since we don't know the location no one will be able to help with rents, property tax, or insurance numbers. Those are all very location specific. all your other expenses appear to be in line with generally accepted principles... except vacancy. All those are currently on month to month leases. I would probably set your vacancy to 12% (this allows for roughly one and a half months out of the year that you will have a vacant unit). This still may be too low, especially if this is on rural land. Rural markets will typically see longer times between renters.

Good luck with the deal. Don't wait too long or someone else will pick it up.

Thanks for the response Ryan.

The properties are in a rural area in Orlando FL, however it is a pocket just off the beaten path with two major roads to the north and south within a mile. The properties are close to UCF (7 miles) and Valencia State College (3 miles). 

I spoke to the Realtor today and the owner is will to do owner financing with 20% down. 

Hello @Gary Millar - I have a couple questions for you.... 

- Are the mobile homes in parks or on land? 

-If they are in parks... What are the requirements to live in the park.... ask for lot rent, credit score, and monthly income? Depending on the park requirements, you will get a feel for the type of people that are allowed in the park. If the requirements are too strict, it will really limit your ability to rent the houses. Typically, I will only work in parks that are safe and I would live in. Your analysis will be different for mobile homes on land. 

- Have you considered partnering with someone on the deals? @John Fedro is an expert for mobile homes in Florida. He might be able to point you to a person in the area that would be willing to partner and help you analyze the properties. 

Hey Matt,

The mobile homes are on their own plots of land, in total it is .67 acres. 

I have considered partnering with friends or colleagues, however they do not have the ability to do so at this time. I have yet to attend local REI meet ups or clubs in my local area, only because I have just started taking action towards investing, however I've been reading and educating myself for a while and I've been listening to the BP podcast and attending the webinars; which has fired me up to take action.

If @John Fedro would be willing to assist, it would be much appreciated.

Thanks

G

@Gary Millar As long as your numbers are correct and the property is valued correctly I’d say the numbers look promising . There’s many unknowns but a quick glance looks like a green light to me . Be sure if you owner fInance youve got an expert RE Attorney who Done These In The past .

Hi Gary,

First things first, great job being proactive enough to evaluate this opportunity and be considering this potential opportunity in the first place.

Ryan, Matt, and Dennis bring up good points and give great advice above.

Let's discuss some things we know. If the property is in a high demand area around the Orlando Metro market then you should have no problem keeping this property filled with renters or tenant-buyers. I'm unsure of the exact location, age, or condition however four modular homes and a half acre of land may or may not be valued at around $300,000. Perhaps the seller is willing to consider financing because this property will be extremely difficult for bank approval or finding proper comps to support the price. Maybe this is a retail priced property on the MLS.

Keep in mind that renters can damage a manufactured home, modular home, or mobile home pretty quickly if they’re not taking care of things. I would encourage you to inspect these properties quarterly if possible. Even then expect yearly expenses to keep up with these rentals. 

I am curious what your end goal for this property is? Are you planning on holding this for a few years and intending to flip it for a profit? Or is this going to be a long-term buy-and-hold investment for the next 30 years? Keep in mind that these homes will depreciate and you will most likely have to replace them with newer models in the future at a good cost.

This certainly looks like it will be a profitable deal over time, however is that the best use of your $60,000, time, and credit? In my experience you will likely be able to purchase more than four separate mobile homes on four separate parcels of property for under $300,000 around your local area.

With all that said I certainly do not want to be a wet blanket. This is obviously an opportunity however if others have not jumped on it perhaps it is not the best deal out there. Perhaps you could negotiate the price down a bit or better terms. Let us know what you decide and keep us posted please. If you decide to move forward keep us in the loop and never hesitate to ask more questions. Keep up the good work. All the best.

Talk soon, John