He can sell this unit for about $79,900 for cash. Under the HUD Access Program, a buyer with a reasonable credit score can qualify for 103% financing and also qualify for the first time homeowner $8000 cash tax credit. He should be able to sell out swiftly. He can wind up with a gross profit of about $38,000 with very little of his own money at stake. Wouldn't you be happy on either side of that deal?
Last post I explained how, instead of lending money, I buy property and let would-be borrows buy it back by paying about 20% per year profit to me. Let's look at who gets what with this arrangement:
From my side of the deal, the worst thing that can happen to me is that the other guy buys back all of the lots. I'll be paid a handsome safe return on my money, but he'll make a lot more. If eh simply disappeared into the mists of time and never bought any of the lots, I will have been able to acquire almost 100 finished lots in a 5-star mobile home subdivision for only $5000 each. That's many thousands less than comparable lots would be selling for. I'd probably elect to place mobile homes on them and to hold them as long term rentals.
In the slow mobile home market in that area, a really nice late model double-wide mobile home can be bought for about $12,000 – $18,000. Set up on my lot, it would rent for about $750 per month. Let's say that I've got $25,000 total invested in a lot and home, and that I can net $500 per month after all costs, that's a $6000 return on $25,000. I'm not sure what the yield is, but it beat just about every other kind of rental return with any other kind of property.
From the other guy's standpoint, he has no investment at all, nor any payments of any kind other than to pay the taxes on a vacant lot. Until he sells the lot, he has very low risk and very little invested. He can buy a new mobile home for about $30,000 delivered, and set it up to HUD specifications for another $5000, including connecting to existing water, electric, and sewer.