Dissecting a Deal Continued

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Topics: Negotiating

A lot people who can’t seem to find houses that they can buy and finance in a way to provide cash flow as rentals either simply give up and quit trying, or they send their money to far corners of the country where houses are cheap.

They totally ignore the obvious fact that an area where houses are cheap is almost always an area where there has been no price appreciation because of lack of demand. In many instances, rents are also very low, so the cornucopia of cash fow that has been promised rarely materializes.

What they overlook is that in the same areas where house prices are exploding to upwards of $300 per square foot, they can still buy new and used mobile homes from the factory or on leased land for between $20 and $40 per square foot. They can increase this by about $100 per square foot by placing them on permanent approved foundations and selling them as real estate.

We buy mobile homes such as these, fix them up, put them on approved foundations, kill the title and get them titled as real estate improvements to the land upon which they are situated. Using HUD financing, we then sell them as conventional stick-built homes with no, or very low down payments and monthly payments lower than the rents they’ve been paying in most cases. Needless to say, they sell very fast for cash which we recycle into more homes.

Here’s how we do this: We are able to buy good used homes in parks, or new homes from the factory to sell, but the key to mobile home profits is first, last, and always in the land it sits on when it is sold. Finding good lots connected to city utilities is very difficult except where the mobile sitting on it is a dirty, smelly, garbage-filled dump that drives off brokers and buyers.

This is precisely the kind of property we’re looking for. We know that by spending a couple of thousand dollars to remove the old mobile, then replace it with one that has been newly renovated or delivered from the factory, we can make a bundle without any competition at all. You should give this technique serious consideration because it seems to work in any kind of market in any area. Let me know how you make out.

 

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