Have guy that is about to lose his mobile home. Its in a park. He currently owes 14000 and by the towns assesment it is valued at 46000. All listed in his park start at 50K. Told him at best I could possible take over payments and give him a little cash to help move. He asked if I would buy it than refinance it to him. I am wondering if any of you have ever done this? Not to comfortable with the fact he can’t pay for it now. Was thinking if I told him I would sell it back to him for 20k at 18% it may be worth it and if he defaulted I could take it back anyway. Any suggestions?
The conventional wisdom seems to say you answered your own question in your post. Most people agree that if the person can’t make the payments now, you have no business keeping them in the property. Personally I like your idea of helping him move. You’re helping him out by keeping a foreclosure off his credit and also throwing him some cash to get into something more affordable. He may do better in a 1 bdrm apartment. He’s currently responsible for not only his trailer payment, but lot rent as well. A small apartment may be more affordable at this point.
Is this a doublewide? If not, $14,000 for a single wide is NOT a good deal!!!
Mike
No singlewide. But with a good size addition with a bath bedroom and office that brings it to 1100sf.
Isn’t a good deal area dependent at all?
I find in my area the biggest problem is all the parks are full so I think it adds value to the trailer when it is located on a lot already.
MHs have different economics than houses, so forget about anything you might have read. Some rules about MHs:
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Buying MH with add ons is generally a very bad idea. They almost all have very bad floor plans with lots of quality problems, especially where the addition meets the original trailer. While it may be different in your area, in most cases you have to deeply discount the livable area - square feet - by 25%-50% from what the price would be if it was a regular mobile/house that size. For something like this you have to know the market - what do “normal” mobiles go for, how much are typical apartment rents in the area and how much could you get for rent of the MH minus lot rent, etc. You really need to know the market to be able to tell if this is a good deal or not. Don’t compare to other mobile homes without additions.
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If the guy is losing his place than it is because he can’t pay. Now, the exception might be if he was behind for a good reason - he was injured and couldn’t work for two months or was laid off from work for six weeks. He couldn’t pay then, he CAN pay now, but he is behind and he can’t get caught up. In that case it may be okay to buy out his loan and set him up. If the details work, then yes, it doesn’t matter if it is ugly, ugly can mean lots of profit. You might get a copy of Lonnie Scrugg’s “Deals on Wheels” and the companion book “Making Money with Mobile Homes” which discusses how to turn a profit in situations like this.
This could be a wonderfully profitable deal, but it has lots of landmines. It is not one I would suggest for your first time out.
I have one suggestion about mobile homes and is stay away from them! I work for a large mortgage company in the REO department and I have not sold a MH without some type of issues. Most the time they are title issues and take months to fix.
All depends on WHERE it is…
I paid $40K for a single wide a little over a year ago (market WAS different then) and did a 30 day rehab, sold it for $80,000. I spent about $5000 on it.
If all the homes in that park are $50K I usually figure on selling anything I buy for less. So let’s say $45,000. Getting trailers financed is almost impossible, but it can be done. I would offer this guy $2000 over what he owes. That will get him set up somewhere else. Be sure to remind him that if he let’s it go, he ends up with NOTHING.
$2000 is better than being homeless with ZERO.
WARNING: Do NOT buy this or any mobile home without inspecting the floor UNDER THE WATER HEATER and TUB. The floors in these things are particle board, NOT OSB board, PARTICLE BOARD. If/when it gets wet it turns to oatmeal.
Check it OUT!
At $14K and the additional $2K to the owner this thing could be a sweet deal. Even if you BLOW IT OUT for $35,000, you have to ask yourself how long would it take to SAVE $19,000???
Just make sure you know the demand for these things in parks. Do they sell quickly, how many are for sale now in that park?
Thanks all for your insight. Deal fell through, not sure if he found someone to finance him or got a larger offer.