Almost every used mobile home property you come across may need some degree of light cosmetic repairs all the way to structural rehab. Many owners/sellers care about their properties and are able to keep their homes looking clean and semi-new for decades, while other homeowners defer maintenance and simply ignore minor issues until they become severe and costly.
In this three-part series on evaluating mobile home repairs, we will be discussing common interior and exterior repairs, as well as uncovering hidden problems that may cause you time, capital, and anxiety if overlooked. In today’s article, we will be discussing three misconceptions that should help unburden your worries if you are inexperienced concerning manufactured home repairs.
As an investor, you inherently understand the value of properly estimating repairs. Every dollar that you invest making repairs is a dollar you must make back before a profit can be realized.
3 Common Misconceptions Investors Have About Mobile Home Repairs
1. Correctly estimating repairs costs is priority #1.
Repairs/labor estimates are only one metric when purchasing a mobile home — and a rather minor metric when compared to others. This article is certainly not advocating repairs do not matter; they absolutely do. Repair costs matter because we must know what our buyers are looking for and what repairs must be made prior to reselling quickly for your desired price/terms.
A free and clean mobile home may be a horrible investment if other factors are ignored. Other factors to consider when purchasing mobile homes may include:
- Homes for sale in the community
- Homes for sale nearby
- How these homes are all being sold and days on the market
- Current time of the year
- Local mobile home market environment
- Ability to add more mobile homes to your land — if attached to private land
- Park rules and regulations — if located inside of a pre-existing mobile home park
- Lot rent
- The park’s application process
- The attitude of the park management and owners
- What your end buyers want to see and will pay
- Exit strategies
- Purchasing terms
- Seller’s motivation
- Size and functionality of the mobile home
- Number of bedrooms and bathrooms
Each one of these questions/topics may lead you to a costly mistake and potentially sabotage your entire deal if ignored. This last sentence is not mentioned to be cryptic or overwhelming. It is to point out that repairs are only one part of the mobile home investing equation. In the coming articles, we will be discussing many of these repairs in detail.
Pro Tip: Know your clear and realistic exit strategies before making any purchase offers to any sellers.
2. You must be an expert to conservatively evaluate mobile home repairs.
With clear vision, a flashlight, and knowledge of what to look for, you will be able to make sure you know what you are buying, or since we cannot see through walls, at least be compensating for the worst in certain situations. More specific information can/will be found in part two and part three of this article series.
Pro Tip: Some investors like making repairs; others do not. There are pros and cons to making repairs yourself versus outsourcing to others. Wherever you fall on this spectrum is perfectly fine and acceptable as an active investor. All businesses change and morph over time, so be aware of your productivity and time management to know where your time is being best utilized.
3. A mobile home must be completely rehabbed before reselling.
This is a very common (and costly) misconception that most mobile home investors have in their minds. Depending on your exit strategy, not only is this thought process wrong, it goes against what your ideal buyers actually prefer.
Let’s face facts — everyone loves a deal, and most buyers would prefer to pay less for a home if possible. With that said, there are certain repairs that will scare off most end user-type buyers from purchasing a property they plan to move in and live. These repairs may include:
- Plumbing problems and leaks
- Electrical issues
- Moving and setting up an entire home
- Chronic roof, wall, or floor issues throughout the home
- Horrible smells
- Bugs and/or garbage everywhere
Your buyers are likely not made of money. Once the above issues are corrected, many mobile homes can and will sell to happy buyers via an all-cash sale, bank financing, seller financing, or other means. Experience teaches that many mobile home purchasers will gladly make minor repairs, such as cosmetic issues, minor painting, minor floor work, landscaping, cleaning, etc. if it means they will save money getting into the home. Know what your specific end buyers are looking for to make a quick purchase. Do not over-improve a property based on what you want or prefer. End buyers vary depending on price points, locations, and purchasing methods (all-cash, bank financing, other).
Pro Tip: Listen to the suggestions and feedback from potential buyers walking though your property for sale. If most folks complain about certain issues, fix these problems fast and re-market.
There is, of course, a certain segment of society that is absolutely looking to purchase a brand new or like-new manufactured home. Cost is of little importance as long as these buyers get what they want. These buyers are the minority that you will come across. Most situations are different.
Always disclose, disclose, disclose in writing all repairs needed with any property you resell.
In conclusion, correctly and conservatively estimating for mobile home repairs is without a doubt a must-have skill that will naturally be developed in you with experience and education. However, this skill is equal in importance to the other areas of due diligence that go into every mobile home purchase. There is no one question to determining if you have a deal in front of you, rather this takes a full understanding of your market and the property you are considering. Be sure to read the remaining articles in this series to educate yourself about mobile homes and mobile home repairs while investing. In the meantime, continue helping local sellers and making purchase offers daily.
Investors: Have any questions about the above misconceptions? What would you add to this list?
Let me know with a comment!