By Jack Miller
If you want to become a full-time entrepreneur one way is to start finding homes to fix up and sell. Unfortunately, the conventional housing market is getting pretty crowded and competition is keen. But, for the most part, buying mobile homes to fix up is largely overlooked despite the high profit in fixing up mobile homes.
First of all, if you've got the space, homes can be brought to your vicinity for repair, then relocated to a sales lot or mobile home park for resale. Second, as a rule, you don't have to get a permit to repair a mobile home. Third, they are a lot cheaper to buy and cheaper to fix up than a house. Fourth, there's a legion of people who are looking for good, clean, affordable housing; a mobile home in a good park can provide this at reasonable cost to them and at a profit to the person fixing them up.
Fixing up mobile homes must start with finding a source of them. Check with lenders who finance them. Lenders don't really want to take back mobile homes. They're big and they have to be stored somewhere. They deteriorate rapidly when left unoccupied; particularly when there's any kind of way water can get into them. Storage can be expensive. That creates an opportunity.
In one instance, I bought a lot for a client which included an abandoned mobile home that was financed through a local credit company. When I asked what the mortgage balance was, the manager said $3,850. When I asked what the cash pay-off was, he said $2200. When I mentioned that it needed “a lot of work”, the price dropped to $1800. When I explained that, because of a drainage ditch around the property, to remove the unit would require a crane. In the interim, $200 per month rents had already started to accrue, he sold it to me for $800. With $1000 of repairs and refurbishment, it sold for $3,995 cash without being moved, and the owner paid $150 per month lot rent.
One dealer acquired repossessed, abused homes from lenders and dealers for little more than the costs of moving them. He “remanufactured” them. Dry-wall was installed on walls and ceilings. Floors were repaired, carpeted or tiled. Appliances were repainted. New fronts were put on cabinets. Exteriors and skirting were repainted. Acquisition, transportation, repair, sales and financing cost $3,000 to $5000. Units were sold for cash between $12,500 and $19,500 delivered and set up. He had an inventory of individual mobile home lots that he'd optioned which he packaged and sold with his used mobiles to those who wanted a lot/home package.
You find “fixers” by cruising the el cheapo trailer parks looking for abandoned and dilapidated mobile homes. Be sure to call on all vacant units that appear to be owned by lenders. Leave notices on bulletin boards. Pay managers finders fees. Stay in touch with companies that lend money on mobile homes, and with investors who buy mobile home “paper”. Once you find a prospect, negotiate for it just as you would a house. If you plan to sell the unit, try to barter a higher price for a single payment note due on sale. Or try to Option the home and space offering your repairs as Option consideration; paying for it when you've found a buyer. Be careful when selling on installments; your collateral has wheels on it.
If you sell a free-standing home on a rental lot, you're probably selling personal property that you can repossess without going to court, but be sure to also get an assignment of the lease as security. Otherwise you might wind up owning a mobile home that you'd have to move off the lot. If the mobile home is being sold together with a lot, it might be deemed to be real estate under State law. In such case, it might be wise to first place home and lot into a land trust, then to sell the beneficial share of the land trust on an installment contract. Properly drawn land trust shares are personal property, so no incidence of title to land or home will transfer until the final payment. You should then be able to repossess the unit without going to court.
