Last time I discussed the cash flow and economic advantages of these mobile home and land properties over their site-built counterparts. Hopefully, you didn’t find these too painfully boring and elementary. I will attempt to give you at least a couple of takeaways with this post on repairs.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
Repairs and Mobile Home Investing
Repairs tend to be easier for mobile homes over site-built homes. I contribute this to the similarity of the way each mobile home is built and subsequently the similarity of the problems from home to home. Your tenant’s/buyer’s expectations for mobile homes seem to be much lower as well, allowing you to get away with more cosmetic issues.
Typically we buy mobile homes that are 10 to 20 years old. Most have been REOs while the rest have been from burned-out landlords. They have all shared a common theme of being vacant for some time, usually 6-12 months.
With vacancy comes theft. We have had to replace at least 75% of the outside central A/C units, which is one of the first things to be stolen, especially in rural areas like ours. (This is where a relationship with a good A/C guy is very important. Our guy can install a working, used outside unit for $800 to $1,500, depending on the size needed.)
Typically the floors need some work. As I mentioned in a previous post, we sell our homes on rent-to-owns so we offer repair credits upfront to entice the tenant-buyer to do the work themselves. This works great, especially when carpet is stained but the sub-floor is in good shape. When the sub-floor has rotted due to water damage, we don’t want to rely on the tenant-buyer and will replace both the sub-floor and the floor.
Walls, Floors, and Paint
Subfloors in mobile homes tend to be cheap particle board, which gets soft when wet and must be replaced. We replace the damaged subfloor with plywood.
Even though carpet is cheaper, we prefer to use vinyl or laminate, which should last much longer. Even though we plan to sell the homes to our tenant-buyers in 11-15 years, the reality is that most will not buy it and will leave within a couple of years. So we try to make long-term repairs when it is cost-effective to do so.
Some kind of roof repair is typically needed. If the roof is metal, it needs to be Kool-Sealed every 3-5 years to prevent leaking. We almost always to have to do this with our metal-roofed homes. with it costing us between $750 to $1,000 (labor and materials) for each home. If the roof is shingled and doesn’t appear to have any leaks (shingles appear to be in decent shape and interior ceiling looks good in all rooms), we don’t bother with it, even if the shingles are aging. We have yet to do a full roof replacement and have simply made repairs when leaks have been spotted.
I know that this sounds like it contradicts my earlier statement about making cost-effective long-term repairs, but in reality – each roof should last at least 5 more years when the tenant-buyer moves in, even with repairs made to the roof. This helps us feel comfortable that we are providing a quality product. If we encounter one in the future that we believe won’t make it that far, then we will replace it.
Paint is always needed but we haven’t done it since our first couple of deals when we did the painting ourselves. Most potential tenant-buyers are not afraid to do some painting so we would much rather have them do it with a color that they are happy with.
We will typically patch the large holes in the interior walls or even replace the walls if the holes are severe enough. The walls are very cheap and keep in mind that interior mobile home walls are NOT load-bearing walls so they can be moved around quite easily.
We had one 4 bedroom home that had its fourth bedroom reduced in size (was virtually a large closet) to make space for a larger dining room by the sellers. Our tenant-buyers came in and easily moved the wall back to its original place to restore the fourth bedroom. This would be very difficult in a site-built home.
This is by no means a comprehensive guide to mobile home repair and I should mention that I am not an expert with the repairs in our business. In fact, we (my dad and I) have gotten to the point in our business where we have split duties and he manages the contractors and handymen almost exclusively. However, a great book on mobile home repair is by John Krigger titled Your Mobile Home: Energy and Repair Guide for Manufactured Housing.
Do you have any questions about mobile home repairs? Be sure to leave your comments below!
Photo: Jon Matthies