If the rent is only $400 per month and your property taxes and insurance are paid from your rental income, then you (or your friend) only have $4440 ($370 per month) rental income per year to cover repair costs and pay back the $24000 loan.
If the loan is from an institutional lender, the loan will not be free. You will have to pay interest on the loan each month. Since you mention the property is on an acre of land, do we assume that the purchase price includes the home and land as a package?
If so, then let’s assume that you borrow the entire $24000 at 8%. If you get a five year loan, the monthly payments will be $487 per month – a little more than your optimistic $370 monthly income.
If you get a 30 year loan, and also assume that you pay $370 per month each month (all of your net rental income), then you will pay off this loan in seven years and two months.
In summary, this is probably not the best rental property to purchase. The good thing going for you is that the mobile home is old and probably fully depreciated so that your purchase cost is essentially the cost of the land. The bad thing about this is that land can not be depreciated, so there won’t be any depreciation expense (to speak of) to help offset taxable rental income.
A better way to make money on this deal might be to buy the property for $24K, less if you can. Use 30 year financing on a land/home package at the lowest interest rate you can find. Then sell the property on owner financing for $30K and set your interest rate two or three points higher than you are paying on your loan.
For example, if you borrow $24K at 8%, the monthly loan payment will be $176 plus another $30 for taxes and insurance, for a total of $206 each month. You sell the property on a land contract for $30K with 100% owner financing at 11% amortized for 30 years but with a balloon payment at the end of five years. The difference between your buyer’s monthly payment to you and the monthly payment you make to your lender will give you a monthly income of $110 each month. At the end of the five years, the buyer refinances his loan and pays you the balance of his $30K loan, giving you about $6300 more in a lump sum to add to the $6600 in cash flow you will have already collected.
A buyer who wants to own a mobile home on land will do this. The buyer will be only looking at the $315 monthly payment to determine affordability. Since you are providing 100% financing, your buyer won’t have to meet the bank’s loan qualification criteria. If the buyer does not have the closing costs, you can pay them and increase his loan amount accordingly.