Hola my fellow inveSTARS,
This post will dive into the numbers and details of the 2 mobile homes I purchased last month here in sunny/snowy Texas. As you probably know I just moved to Texas for a change of scenery and being that MHs are crazy easy to manage I am able to move about fairly easily. Hoooray!
I was a little apprehensive when walking into the mobile home parks here in Texas. I was surprise to be feeling butterflies in my stomach similar to when I just started my investing career. It was definitely not a good feeling. I encourage all of you who are just starting out to push through this inevitable feeling of terror and pain, the rewards will be GREAT!
As I have said before there are many ways to find a secure mobile homes within parks and on land. (These 2 are located in a local family park. Lot rent = $225)
I didn’t even have to talk or negotiate with any sellers. Imagine that... In fact these were probably two of the easiest homes I have ever picked up. Not saying they are all this easy or all fall into place this perfectly. The park manager was super helpful and supportive, she had time to talk with me and walk me around every place she had for sale . The deals just seemed to fall into place. Chance favors the prepared... I love that saying.
Why didn't I have to talk with any "sellers"? I bought both of these homes directly from the park itself. What do I mean? Well, if you have read my course you know that we always ask all park managers if they have any homes that they have recently gotten back from eviction or abandonment and there are strategic techniques we use to do this successfully. At the time she had 3 homes for sale at were in the price range we look for.
Pop quiz... Which MH do we pass on?
1. 1970 Single-wide 2/2 mobile home. Needs cleaning of junk thrown out around mobile. Appliances included. Window air conditioning units (2). All room sizes are large.
2. 1984 Single-wide 3/1 mobile. Needs chronic floor, roof and ceiling repairs. Rooms are all good sized. Appliances included. No hot water heater.
3. 1991 Single-wide 3/2 mobile home. Needs to be cleaned. Two broken windows. No roof, ceiling or floor damage present. Central heat and air (looks like it worked). Needs to be professionally exterminated. No appliances.
If you guessed that I passed on #2 you are correct. Remember that ceiling, roof and/or ceiling damage is not necessarily a cause for you to run for the hills but when the damage is spread throughout the house we say NEXT. The most damage I will tolerate would be a 3x3 square foot area of damage in a mobile home. I have found that this is cheap to fix and anything more is typically a cause of a larger problem, usually a severe moisture problem.
Purchase price and terms = $1,000 each. Not only did I buy them both for a total of $2,000 but I was able to put $1,000 down and have the manager accept $1,000 in 4 months, a one-time payment. PLUS as if that wasn’t enough to be a slam-dunk deal, I got the first 4 months lot/pad rent FREE (waived). Why? Because I gripped and moaned that it would take months to fix up the trailers and get them filled. It didn’t…
Here’s a list of my expenses to fix up both homes to be ready for sale:
Exterminator = $60 (both homes)
Junk & carpet removal = $250 (found on craigslist)
Used fridge, stove, washer and dryer = $375
Linoleum tiles for floor decoration = $100 (both homes, cheapest design)
Glass for 2 broken windows = $40
Air fresheners = $25
I have yet to find a good handy person and/or tenant-buyer that could do the work for me in Texas so me and a buddy took a weekend and knocked out the work with somewhat ease. I’m not very handy but nothing I described above takes too much skill. In fact the only thing we had to do was sweep and place the linoleum tiles to the floor and install the new window panes. If there was any floor or ceiling softness I would have searched craigslist for a local handyman (there is no way I’m attempting that, even though I’ve seen it done dozens of times)
I had no idea how slow or fast the properties would sell. However I knew I was offering a good value. Right near downtown for $625/month for the 2/2 and $725/month for the 3/2. I sold them both for $23,500 each. Net cash-flow > $625 a month. I make all my money back in 2 months. Plus I have the first 4 months free and will be receiving payments for the next 8 years with the note I structured.
I sold the 2 mobiles to a mother/father and daughter. This has happened before where a mother and/or father wish to live close to their child and grandkids. I really like selling homes this way because if the child has trouble paying the mother/father can help cover the cost and vice-versa.
I now need to start looking for some mobile homes attached to their own land.
Happy investing,
- J. Fed
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