We are looking into buying a 1995 double wide to live in and fix up and resell in about 5/6 years to hopefully make a bit of cash. At the moment it is on cinder block, the tongue and wheels have been removed. We are wanting to put it on a permanent foundation and possibly add a garage. Would anyone be able to advise us on whether or not we would make any money on the addition of the foundation and/ or garage. The double wide is on a 1.1 acre piece of land.
It is a 3 brdm, 2 bthrm, living room and kitchen and is selling for $51,900, we have put in an offer for $45,000 which has been accepted. Now we are waiting to hear back about the appraisol. We are anxious to hear from someone who may have some kind of insight into this kind of thing.
Thanks
I am not sure how your area is priced or how fast those land packages are selling. Generally speaking they don’t appreciate much over time and financing is always a hurdle. Where you can make really good returns on you money is holding the note on these. In MH’s FINANCING is the problem and the money is in fixing problems! I like the land packages because you own the land so you have the value of the land going up even if the MH doesn’t. And I can always replace the MH if for some reason it gets totally destroyed. I wish I could help you more but you really need to do some due diligence and get some idea what you think your potential is 5 yrs from now.
1st time,
I am not near as knowledgeable as mrmobile in regards to mobile homes, but here is my personal opinion…
I would never live in a mobile home.
Unless totally redone in and out, meaning REAL sheetrock walls, non-plastic fixtures, etc., mobile homes fall apart and take alot of continuous upkeep and maintenance. The home itself will always lose value , but hopefully the land will appreciate.
Have you checked the local papers to see what other homes that are say 5 years old, on land and with the additions you are wanting to add are selling for? I honestly have not met or heard of too many people who bought brand new homes with financing with little money down and actually still happy with their purchase or upside down terribly to where they are hurt trying to resell it and get out of the house.
Just check your market.
Just to add to what Abel said, MH’s do depreciate and land appreciates generally but at different rates. When you improve land with a home you have done the work for someone and should get paid for it. It’s up to you to make sure you do your homework and get the best deal possible to maximize profits. MH’s are affordible housing and for some people they have that in there mind and you can’t change that. So I have found that nitch to be very profitable because of that perception. On the other hand as Abel mentioned a lot of people get screwed by a dealer and the bank financed it “low down” “affordible payments”. I can help these people out but it will cost them one more time because I have to make a profit. A lot of sellers owe 5K to 10K more than what I buy it for and either bring cash to closing or roll it into the house loan of the new home they are buying. It blows my mind but I have cash and cash in this business is KING!
Mr MH
In reference to Ramirez’s remarks:
I’ve lived in a MH and have lived in apartments and several SFH’s. The best place I’ve lived was in a MH. The up keep and the ability to repair was a lot less than a sight built home. With the exception to my home in Arizona both my Missouri homes have been a hassle to own and repair. My current home is costing me $1000 to $3000 a year to maintain. Climbing ladders to reach high places and the amount of money spent on a large yard is mind bogling.
I developed and ran a comparison template on SFH verses apartment verses MH. Far less expensive to own a MH. Apartment and MH were close but the MH still won out. Case in point - one aspect: property taxes have sky rocketed over the past 10 years on sight built property such as homes and apartments. Yes, even in apartments you are going to pay the taxes. I ran this with data prior to the real estate down turn of the past 24 months and MH’s still won out. Apartments beat out SFH’s by about $30K but MH’s cost close to $70K less over a 30 year ownership period. Another example taxes on my current home with tax inflation estimated will cost me close to $50K over a 30yr period but taxes on a MH will be only a fraction of that. You can then look at home insurance and find a big difference as well.
When we moved into the MH in AZ the park was ok, not in the best park of town. People didn’t junk their lots but they were blah. We cleaned up our lot planted flowers bushes and cut the lawn weekly. Within 3 months you could see the beautification spread down the street and over to the other street. People began meeting neighbors and a real community was born.
I selling my house this springs market good or bad I’m selling and moving back into a mobile home. This time I hope to own the park.
And sight built homes do depreciate. After about 20 years the tax base on a home isn’t as high as newer homes in subdivisions and the city begins to creat pressure in those areas using neglect. You roads and bridges won’t get repaired, streets get cleaned last. Your equity doesn’t grow for ever.
Oh and by the way…Those of you wanting to invest in SFH’s I can’t think of a higher risk than a SFH. Renter or buyer skips out you lose 100% of the cash flow and you’ve got a huge unexpected expense. Apartments have the least risk in that area.
Frank V.D.
MH’s have a good amount of depreciation associated with them. Real Estate in general has taken a downturn obviously the past couple years, but regular houses in general won’t plummet in value like a MH. Sure it’s less expensive to live in a MH. That’s why many poor people live in trailer parks.
The risk of lost cash flow is spread out when you buy multiple SFHs. If you buy right and have good cash flow, you can afford to have a couple empty while cash flow from the others covers the bills for all the houses. It is also much more likely that you’ll have renters stay in a house for several years vs living in an apartment. Each investment has its pros/cons.
I beg to differ justin0419.
I live in a middle to upper middle class subdivision. More than half the homes around mine are now investor owned. More than half of those have problems with people walking off in the middle of the night. Turnover I would gestimate at 2 to 3 every 20 to 30 months.
I have talked with and know a handful of SFH investors. They continuously tell me about losing tenants after they have stopped paying rent. They usually get stiffed for 2 to 3 months of rent and it takes 2 months to get the house repaired from the damages. They are out $5K or more depending on repairs and to have a turnover every 2 or 3 years eventually cuts into the big equity pay off investors are waiting to cash in on.
They say the money in SFH rental isn’t in the small monthly profit cash flow. Most say it is only a couple of hundred dollars a month at best. It comes from holding the house for 5 to 10 years and pulling the equity or selling it off. Wit the severe storms we get here they spend a lot of the positive cash flow with minor exterior repairs which in this area are never ending. In tornado alley we frequently get hurricane winds which crates havoc on roofs, siding and will take a 20 to 25 year paint job off in 5 to 7 years.
I think if they accurately track expense then trend those expenses they would find the cost of repairs in a 10 year period would hit close to $15K maybe higher with the current turnover rate.
The money in SFH’s is in flipping and getting the money now. But we all know in the current economic situation flipping has slowed to a crawl on homes above $100K. Under $100K, in this area, is only a fraction of what it was but is doing ok, per local investors. But you investors can scarf them up by the dozens and hold them until people can afford them again. My projection is around 2013 or 2014.
Hey, if most of you want the high risk of a SFH’s that’s ok with me. Multi unit housing makes more since to me. Spread the risk, and per unit to SFH unit cash flows are about the same. Cash now I think is better than cash later. As you pick up those bank repo’s for low dollars people don’t have job security and will choose to wait 4 or 5 years until they see job stability before buying. Those evicted from SFH’s will rent most of the apartments driving up rents. Apartment complexes in this area are now building additional units to meet demand. This will drive existing apartment renters out looking for inexpensive housing and many who have lost both jobs and are working under employed will buy or rent MH’s. It all increases my prospect/customer base. Families really like to have their own yard space and really hate to have people living over them.
There are mulitple ways to make money in REI and people have their own preferences. We own both multi-family and SFH. The risk and reward of a business has a lot to do with the way the owners run the business. Maybe the “investors” who own properties in your neighborhood paid way too much for them and were hoping for price appreciation. Maybe they don’t track their expenses closely. All ours are tracked in QuickBooks and I can tell you how any property does during any certain time period.
I’m not saying rentals is the perfect business and it’s definitely not without its hassles, but it is a viable business. How you treat people and the value you provide them helps keep people in place. We hardly ever have anyone move out and most of our tenants are telling people they know about us. We stay full except when I’m rehabbing a property. In my area, someone can get a decent house from us in good shape for less than they can get an apartment.
If you put that on a foundation with hurricane straps, it becomes bank financable. That makes it much easier to sell when you get ready to sell.
A decent garage is always a selling point. Plus, if you build it now, you get to live in a place with a garage. If you decide to rent later, it is much easier to find a tenant if there is a garage.
Other things that make a place easier to sell are nice landscaping and fencing that will confine kids and dogs. If it is a country area, you can get away with field fence with a combination of pressure treated poles and pound-in metal (look and see what the neighborhood fences are made of)
You don’t get any more money for the landscaping and fencing, but if it cuts the time on market, that is money in your pocket. If you will be there for 5-6 years, you can do the landscaping for very little money, by purchasing small pants and letting them grow. Just be sure to have a plan and use a design and do not simply plop in plants wherever.