[Anonymous]

Anonymous

Gold is Where You Find It Continued
May 16, 2008
We?ve been talking about ways to make money with mobile homes when stick built houses aren?t selling because of their high price.

As pointed out in a prior Blog, it?s possible to make money by moving a mobile home onto a new site. But money can be made by moving one just a few feet. We are currently looking at a 20 year old unit situated on a little over 3/4ths of acre for $161,000*. That is a very high price for this package, but there is gold in them thar hills. If we moved it onto one lot on an approved foundation and rehabbed it at a cost of about $20,000, we could expect to sell it for about what we originally paid for the entire parcel. This would leave with the other lot for which we?d have effectively paid the $20,000 spent to move the unit off of it.

We could place a new 28?60 home on it at a cost of about $60,000. The costs of splitting the lot, landscaping it, and selling it will add another $20,000. We should be able to sell this package quickly for $175,000. That boils down to a $75,000 profit in a couple of months. How long would it take to earn this amount of profit doing anything else? That?s why I like working with mobile homes.

* Before you get too excited about these numbers, in most areas of the country all these prices would be much lower, but the profit percentage would remain about the same.

High mobile home profits come about because of a disconnect between the perception of the public about used mobile homes in mobile home parks, and the value of a remodeled mobile home on its own site.

When a person tries to sell a mobile home on leased land in a mobile home park, because of high interest rates for used mobiles, the buyer confronts the prospect of making relatively high payments for the home and high rents for a lot in an attractive park. These often combine to total around $1200 per month; about the same as payments for a conventional house. This drives away buyers and sets the stage for a cash buyer who will buy the home in place. We have been able to find really good late model homes in high cost parks for around $20,000 because of the foregoing factors. But wait, there?s more:

When an owner is trying to sell a pre-1976 home on a lot, or a single wide home of just about any age, it is very difficult to find financing. Rather than sell it with seller financing, most owners would rather sell it for cash at a lower price than the lot itself would sell for if vacant.

For the average seller, destroying their home before the lot is sold is a daunting proposition, and there would still be few cash buyers because lenders don?t like to lend on vacant lots. That provides a real opportunity to buy the package at a very low price. On absentee owner sold three lots with older units on them for $100,000. Each lot would have been worth almost that much once the units were removed.

Continued next time.