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Question

Hello! Currently, I’m in the research phase of the REI timeline, but I came across this property:

https://www.redfin.com/SC/West...

I did a quick calculation and the numbers were incredible. $15,000+ annual cash flow and over 30% ROI? Am I missing something, or is this deal really that good? I’m questioning it because it’s been on the market for nearly 200 days. If the numbers are for real, why haven’t anyone bought it yet?

Joe Villeneuve · Answer

...because it's a manufactured home..a double wide.  It's almost impossible to get financing for them.  It's also impossible to get and accurate value for them unless they are in a trailer park.  This is on a private lot.

All of this means you'd need to pay cash for this.  Nobody in their right mind would pay $174k for a property that gets only $33k in cash flow.  That's a 6 year wait before you start making a profit, on an investment that rarely has any appreciation.

Joe Villeneuve · Answer

Here's what is really happening.  That Asking Price is most likely based on the property (land) that double wide is sitting on...not the trailer itself.  Brand new double wides, top of the line, shouldn't cost more that #125k...and as low as $60k.

The property could be worth more with the dble wide removed because it would be based on the potential of the land.  Right now, it's based on the value of the dbl wide...slightly inflated for the land it sits in.

What I would look into?  How much would it cost if you sold the dble wide to someone else who would move it to a different location to live?  Then, see if there's anyone (i.e...developer. builder, ...etc...) interested in buying it vacant (without dbl wide on it).  Thi is a terrible rental property, but could be a pretty lucrative flip deal.  Just ask the seller during closing if they have had any other interest...specifically from a builder.

Blaine Alger · Answer

@Ean Bass

That does indeed look like a good deal from the description. However it is important to note that the real estate agent wrote that description and it is their job to make it look like a good deal. I am not saying that the agent is lying about the property generating 33k a year but I would definitely be skeptical and double check the market rents.

Just as @Joe Villeneuve mentioned, properties with manufactured homes do not fall under the same financing category has SFHs. I would say that this property's financing might be more similar to financing a mobile home park and there are additional parameters that lenders look for in order to finance a mobile home park. Now with that being said, I would not go as far to say it is impossible. You can always check out local community banks, credit unions, or even try owner financing. Just know that to get a loan for a property like this might be substantial more difficult compared to a traditional property.

Lastly I saw that you noticed the days on market, which is a good thing to look at. One side of the argument might suggest that this is a bad deal and thats why it has be on the market for 200 days. However you could also say that since it has been on the market for so long, the seller might be more motivated and you could get a large discount on the purchase price.

Theresa Harris · Answer

@Ean Bass  check with a loan officer.  You can get a mortgage for those.  Insurance will be higher and a bit more problematic to get, but it can be done.  I know several people (in Canada) who have/had mortgages on trailers on private lots.

Ean Bass · Answer

Thank you for the response, Blaine! I did think some of the numbers were inflated, that’s what a realtor is paid for I guess. I was really looking for multi family properties in the area and stumbled across this one; I ran the numbers and they were over double anything else I had previously analyzed. But if you can’t finance the deal, it makes sense why it hasn’t sold. Thanks again for the help everyone, I’m sure I’ll have more plenty more questions!

Ean Bass · Answer

That makes sense. Yea, I wouldn’t pay cash for this property. Thanks for the response!

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