All Forum Posts by: Mark Gruetzmacher

On the surface it sounds like a good deal.  Something I sure would check into myself if it was something local to me.  Are they are on city utilities?  I would double check the zoning and such and get it in writing with city/county. You say what is there is grandfathered in but if one person says yes and you buy it then the other person says no you can't do what you plan to do, then that would be a waste of money.  We have a  lot of mobile homes here by me and some of this stuff is very bad.  I have not sure too much that can't be fixed.  Again depends on the actual home itself also as there is only so much you can do.  Granted if you are also paying someone to do it then that might cut into your budget alot.  Like others have said, 10K is a lot in repairs.  Double check your numbers and make sure it works.  If it looks good then go for it.

If you get your license then don't you have to work for a company as well.  That is something to consider as well.

@Steven J. I agree with everyone else as well.  How old of a home is this?  I have seen some homes with copper in them but it is rare.  Usually it is the grey poly pipe that is not as good a pex.  You can buy some quick connectors at menards that go from almost any pipe to pex or more of the same pipe.  They are white and you just push them on.  I have not personally used them but have heard good stuff about them.  I am don't in SD so I know how the cold can but you you get it a little colder up there.  It is pretty simple and easy to fix yourself, it is just time consuming.  Materials shouldn't be too much if you use PEX.  You could hook up an air line to the incoming water line and pressurize it to find more leaks with out the water as well.  Hopefully you get it fixed up.  Take Care.

@Deborah Walleman 

 What @Kyle Penland says used to work out real good but since the new Dodd Frank and the Safe Act laws past in the recent years, the seller financing has pretty much gone by the way side.  People still do it but if you do just make sure you understand the laws you have to comply with or understand the consequences if caught.  If you have not heard of it you can search here on BP.  There are tons of posts about it.  Just wanted to mention that, the more info the better I think people are off in the long run.

@Deborah Walleman There are a lot of different things to consider when buying a mobile home.  What kind of age is it and what price range?  Prices vary greatly from state to state and even from city to city sometimes.  Prices in my area vary from maybe $1000 for a barely livable older unit in the 1970's range.  But those same years fixed up sell for anywhere from $5K-15K.  But on the same token I have gotten some mid 90's for 12K but they needed work as well.  

Again depending on the price and age you would need to decide if it is worth it or not.  Go take a look at it and see what it is going to need and then make a decision. 

 First make sure the owner has clear title to the mobile home.  They are usually like car titles but you have to check with the county about the taxes.  The older homes usually have the taxes a year in arrears so when you buy it the taxes have to be brought current which usually means  all of last years taxes will be due plus the current years.  That might vary with your state and county.

Then I would check around your local area and see how it compares to others for sale as well.  If you are buying something in a mobile home park you need to first check with the park to see if they allow people to rent them out.  A lot of parks do not allow you to do that.  See what the lot rent costs as well.  If lot rent is $300 and you can rent it for $400, it might not be too great of a deal. 

Mobile homes in general all have more issues than houses it seems and more so with older mobile homes.  If it is going to need a furnace you need to price one out, they are not too cheap.  If it needs flooring throughout then that is anything expense as well.  Check the floors for soft spots around the doors and windows.  Those floors get weak very fast if water is allowed to soak into them.  

There is tons of things to consider when buying mobile homes for an investment. Just don't pay too much or buy too old. Me personally I would not buy before 1978 when the HUD codes came into play. I would rather have something in the late 80's at a bare minimum as well but everybody has a budget to go buy. Let us know what it looks like and the age and price point.

Good Luck

@Steven Hamilton II No it was not available for rent either.  It needed all sorts of stuff before it could be ready to rent.  So again I should lump all of it together, repairs, utilities, lot rent, etc and add to the basis/capitalize them and then once it is ready to rent then you can expense those out unless they are improvements, correct?

@Curt Smith Please forgive me as I am fairly new to all of this and maybe I am wrong but is the above calculations correct?  I guess I ask because I have seen some different numbers or I come up with the following.

NOI= 17 x 12 x .7= $14,280.00 Because you have 17 filled lots @$100/lot,

Seems like most people do not include the cost of the mobile homes in the price of the actual park itself.

Which would make the cap at 6.8%

You have to value the homes as well but I would not think you would want the value of the homes in the park price.

Again maybe I have misunderstood the calculations but thought I would ask.

@Steven Hamilton II Thanks for the reply back.  I was sort of leaning that way but glad you could comment. 

Another quick question.  I also picked up a mobile home in a park at the end of 2014, I have lot rent and utilities for a few months in 2014 and whatever until thing are done and it is put into service.  Is this the same situation that I would add the lot rent and utilities into the cost basis until it is put into service?  Also then after it is in service do the lot rent and utilities become becomes expenses for each year?  Thanks again for the response.

Ok my understanding is that repairs and improvements to get a property fixed up so it can be put into service as a rental are added to the basis of the property per what the IRS says.  So with that said, I have a couple questions.

#1 -If you bought the property last year and did nothing to it because you didn't have the time so it just sat there, do you record it on your 2014 taxes and if so what do you record? It will need repairs and improvements before it can be placed in service, do you then add them in the next year?  If it is not placed in service yet, do you do anything?

#2 Different property, if you bought it last year and did repairs and improvements up through Jan. and Feb. of this year and then placed it in service this year, do you account for anything for taxes for last year?

Regards,

Mark

@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.