Are Mobile or Manufactured homes even worth wholesaling??

Question

Im a beginner wholesaler and im trying to gather as much information as I can about the business. After looking at FSBO properties in my state ive come across alot of Mobile or Manufactured homes that are selling way below market value, some 60-70% below. My questions are is there a different way of figuring out comps for these type of properties and are they worth looking into to wholesale? Any knowledge on these properties would be appreciated.

Dale Osborn · Answer

Compared to banks - the interest you earn is much better. NC was 15% for carrying a note. Here in WA rate is 12% but again much better than the 0.80% for a 1-year CD??

Above is for MHs in MHPs. For MHs with land you might charge a lower interest rate, but with you buying at wholesale and selling at retail - there are profits to be made.

The choice is yours to make - evaluate the opportunity and if it looks like a winner - go for it.

Dale Osborn · Answer

James

Under section 8 guidelines - a person can apply their government handout to buying a house. You classify MHs as affordable housing, yet HUD does not consider them as affordable housing so does not allow their section 8 clients buy them.

In some areas, investing in MHs is very good while in others it does not go anywhere.

James Hamling · Answer

I suggest not to touch one unless the cash flow is at least 2X that of a stick built given the same numbers. That is a minimum bench mark.

There is (as a general rule) more tenant issues, be it maintenance, defenently more turn over, and missed payment issues then a stick built because it IS a lower class home on average. I classify it under "affordable housing", because really in most cases that is what it is, a home for less then a home price.

Cash flow wise, in my area we wont look at it unless there is at minimum, absolute rock bottom minimum 25% annual ROI, and that is given a cash purchase, no HML, no financing.

Manufactured homes are cash cows if done right. Aways plan them with a maximum 15-20yr life span, that is to say if it is 5yrs old, factor you will only earn for 15yrs on that home before you must consider it to be replaced. If it is 20yrs old, figure it will not last period, and it must have a massive ROI, I set those at above 100%.

Remember, it is a home on wheels, and deteriorates like anything on wheels. It is different then stick built by means of factoring in a use span.

Shawn Vassel · Answer

Ive actually been doing alot more research in mobile and manufactured homes. If you can get one for a good enough price where you can purchase it yourself, then the cash flows are sometimes better than that of stick homes. I havent had any requests from any buyers ive come across but it would be good to have as passive income.

Delondon Dear · Answer

In my area, you can make some money with them. I actually never wanted to mess with them because my buyers never asked for them.

James Hamling · Answer

Shawn,

I very loosely knew this well to do investor back a few years when I was trying to break into doing my own investments instead of building for others, so I too was on this information overload quest, networking like a star struck paparazzi. He had this saying that interested and confused me at the same time, he would say "find which way the pack is going, and go a different direction". I have come to learn it is just that, competition sucks, lol. Easier said then done though to forge a new wagon trail that leads somewhere good, and not off a cliff.

With the rental market trending where it is, the state of financing, economy, and so on I think you will find a real good nich in those, with very little competition.

Matter of fact I am going with an associate in a few days to inspect a park purchase we are 95% likely to finalize, that consists of filling 14 empty lots, and developing another 20, so that is 34 trailers we will be buying. Do we want to pay retail, heck no, do we want some alternative, absolutely. So, if I and an associate are doing it, I gotta believe there is a whole lot more people out there doing it, and that is a market right there. 
   I will warn you, we buy the trailers at really steep discounts, huge, under 20K, usually way under, so unless you can get a really nice one at a huge discount simply buying and selling as in a traditional wholesale may not be the route to go. 
   What we just talked about yesterday may be though, we spoke about how great it would be if someone, be it a manufacturer or whatever, would place the home on our lot, we and or they market the thing for sale, and when it sells it is sold and we start collecting our lot fee, ie we never bought the thing just gave it a place to show and sell at, and whoever is selling it gave us a chance to collect our lot fee. 
   Seeing as we are looking at filling so many lots that is most attractive to us. Sure, if we owned them all as rentals we would cash flow more, but in our eyes it's a lot more hassle and maintenance for us, we prefer to get our lot rents and call it a day, different strokes for different folks.

Opportunity abounds for those willing to search and work for it. It is work, hard work, and it pays for those willing to make the voyage. The big boys say it is a "get rich slow" thing, it really is. Once you put in that early work to gain your networks and connections, to establish everything, it hits this auto pilot point where the work is just in maintaining and growing.

Best of luck Shawn

Shawn Vassel · Answer

Thanks James. Like I said im trying to gain as much info and knowledge as possible pertaining to wholesaling and ive just been brainstorming and trying to find properties with the least amount of competition. Ill look into them some more. Thanks again.

James Hamling · Answer

Shawn,

Manufactured housing is an entire world unto itself and so very different then stick built. For instance, the 2nd market for it is gone, hence lending for a retail buyer is vastly different, nearly no conventional lender who lends in stick built will touch them, unless they can meet FHA, and to do so there are many special caveats, like the home MUST be attached to lot AND have been located by the manufacturer with documentation to show, or else no FHA and no conventional lending, which means 95% of retail buyers must receive portfolio lending.

No some areas are so short on housing, they are having an orgy on the things buying them from every contact possible, I'd say that is a huge wholesale opportunity: buy land plus trailer for 10K, sell trailer for 15K, have land plus 5K, not bad.

Then there is park development and investment.

Long made short, yes, huge opportunity and much much less competition, way way less, but that means the information is 1% as easy to find as all the other wholesale forms, but if you work your butt off, make contacts, network, oh yeah, super huge opportunity right now.

Shawn Vassel · Answer

Thanks for the response guys. I appreciate the info

Greg B. · Answer

I would take a look at the county assessed value.  Also, would look at recent sales.  Not so sure about the values zillow assigns.

Are Mobile or Manufactured homes even worth wholesaling??

Most Popular Reply