So, here is my plan for entry into the Real Estate Market. I would appreciate comments if you recognize any obvious flaws.
I plan on purchasing HUD mobile homes. Why you ask? They are cheap, easily repaired, and easily rented. Plus, low initial investment (and HUD pays closing, my wife writes the contract and gets the 5% realtor’s commission). I plan on putting 20% down and using conventional financing for the balance. HUD currently lists several properties in my target area valued at 60k, ask reduced to 41k. Payments with taxes and insurance would run about $450 per month, and the properties will rent at $750 per month. Nice cash flow, but I plan on renting to a t/b and getting my money out after 1 year.
Looks like a foolproof plan and a nice profit. Any comments?
I was in the mobile home business for a couple of years and own 2 high end ones myself.
I have a close friend that does what you are planning, here in Austin.
Drawbacks:
Manufactured homes depreciate in value. With the bankrupcies of Oakwood and Conseco, be real certain of your current comps, not what HUD says.
As you probably know, it is harder to get qualified for MH loans, therefore harder to sell. Not as bad for ones that are already set up, but still a pain.
Here in Austin, the market is so soft that the only advantage to buying a MH is if it’s on acerage, but I’m sure Houston is doing better.
Just be prepared to be stuck with a few as rentals. But if the numbers are right, that’s not a bad thing either.
Best of Luck.
Thanks for taking the time to respond…
I am prepared to live with a few as rentals give the cash flow, if I must. As you mentioned, that may be a real possibility. I think mobiles are a good springboard to move up into higher rent (traditional)properties.
You can’t rent a doghouse around here for less than 750 a month…So we’ll see what happens…
Me in 5 years… :banana
Hey, you’ll be pretty cute in five years !
Forgot to mention, I assumed the homes were on their own lot/land and not a rental park. Otherwise that changes things a lot.
Best of luck !
Oh yeah, definitly on land…