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Need your help.
I am looking at a 3/2 mobile home,1294 Sq.Ft. on 1 acre.
Bank owned. Asking $18,900. Realtor listed.
Question?
1.Should I buy and hold in land trust?2. Plan to rent. Potential rent $600.00/month.
3. Plan to lease/option for 1 year and then Lonnie Deal it.
Please advise.
Thanks for your help.
Don,
You should always hold real property in a land trust. Don’t know what you mean Lonnie Deal it after one year.
It is up to you to decide what is your game plan. Do you want to make short term some what immediate profit or hold on for long term cash flow? Also $600 a month seems very cheep rent. You sure that is the going rate in your area? Check Rent O Metter or Zillow.
Don Wede.
Just a few background questions, not intended or claimed to be a complete due diligence list:Is the drive time and distance between you and the MH location reasonable for you to be personally involved for the long haul?
Do you know yet if the age and repo?d condition of that MH comes anywhere within yelling distance of the bank and MLS listed asking price? And if not, what a reasonable offer (based on your financial ROI criteria for the deal) might be?
Is there significant fixer-upper work needed to figure into the deal?
Do you have any idea why this particular MH was repo?d? See my next question for possible relevancy.
Is this MH in an area where there are a lot of other such repo?d MHs, or in an area where the local jobs economy is in, or is headed into, the toilet?
Is this particular MH on land in a MH park where park rules and management govern, or on stand-alone land where the local community and politics are more relevant? Is this a community where local efforts are trying to shut down or run off every MH and MH park if at all possible? Or is it at least a benign community, even if not otherwise supportive?
Or, is this MH in an area where there might likely be other similar opportunities to do similar deals in case you decide that becoming an MH mogul belongs in your bucket list?
Can we assume that if you go the Lonnie Deal route that you?re relying on the updated version of Lonnie?s material that Jackie had revised (I think) about 2014 to handle Dodd-Frank and SAFE Act effects?
–Dee
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Thank you Dee,
The MH is approximately 30 minutes travel.
1996 year
Need to check on park rules. On its own land.
No HOA
Another mobile home within 1/2 mile
Offer based on my perception and analysis of desired return
If I do a Lonnie deal, I will make sure that I am in compliance with the new rules set forth in Dodd Frank. That is one reason that I am thinking about holding it as a long term rental rather than selling on Lonnie deal.
Please pose other questions that you think I need to explore in order to move forward.
I have not gone out to look at the MH yet but plan to go this week and check out the opportunity.Thanks very much for your help. That is another benefit of being a member of this group.
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Just a thought. With that 1996 manufacturing year, some MH parks have no problem at all with such MHs or even much older. Some however, have a different attitude that may be somewhat hostile, which might come to light at some point when an older MH changes ownership. You definitely want to learn what the prevailing attitude and current rules are regarding MHs there as they age — before considering going on title.Also, since this was a repo where the previous dwellers were not making the payments, there’s the likelihood that some maintenance expenses may also have gone “deferred.” Things to check out….
–Dee
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You might also check with the realtor and the bank to see if either, or both, have at least a preliminary list of deferred maintenance items. If so, I wouldn’t expect it to be complete, but it might give you some idea of how much inspection expertise you might need to bring on scene at some point to paint a more complete picture. You might even learn who the local repair people are who have actually worked on that MH in the past, and know it well. You never know until you explore.–Dee
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There’s also the possibility that the bank (and/or the listing agent) relied (for the first offer asking price) on a drive-by BPO (broker’s price opinion) that might have been done without a thorough, let alone competent, inspection of condition. Be very alert for undisclosed “as is” conditions. The cynic in me calls to mind the classic comedy movie with Kurt Russell called “Used Cars.”–Dee
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I know there are both Kelley and NADA value guides for mobile homes. There may be others I don’t know about. You can be sure that bank has their copy. It might be worthwhile to ask your own bank if you could look (freely) at their copy(s) of either or both — so you’ll have a better idea of what kind of ammo the other side might be using.–Dee
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Also, don’t expect that national average values numbers in either Kelley or NADA guides will necessarily reflect what regional or very local demand figures for your area are. Just like used car dealers keep a sharp eye on local wholesale auction results that the public never sees, but if it’s to their advantage they’ll flash a Kelley or NADA value guide to the less well-informed customer/prospect, you can expect that a bank probably can’t resist emulating that used car industry practice. (In the Dallas / Fort Worth area, the Manheim Auctions in Euless, TX are a good example for vehicle wholesaling.)(In another lifetime when I was on a negotiating team chasing subcontract deals with potential vendors for Rockwell, I encountered several different and conflicting formulas to estimate learning curve effects for cost estimation as a manufacturer gained experience making a new product. I asked my superiors which of those learning curve formulas Rockwell used in their negotiations. The answer was, whichever one gave Rockwell the best advantage — science had nothing to do with it.)
The best phrase I’ve heard to describe a helpful mindset in such cases is to be skeptical at best, and paranoid at worst.
–Dee
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