There are re-hab opportunities with remarkable profits for those who are wiling to work for their money. The key to refurbishing a Mobile Home is to try to make it seem as much like a new stick-built house as possible, within the bounds of good sense. In any event, you want a prospective buyer to be able to be proud of his home and not to feel that it is old and obsolete.
I once visited a used Mobile Home sales lot whose banners proclaimed “Re-Manufactured Homes” in Arizona. The proprietor bought shabby 10 – 15 year-old repo homes from lenders and trade-in homes from dealers for about $8 per square foot in “as is” condition, then spent about $15,000 per unit to “re-manufacture” them. He made about $10,000 profit per unit.
For example, a 1560 square foot double-wide unit would have cost him about $11,500. Using a low cost assembly-line approach with largely hourly labor and materials purchased in bulk, he’d put in $15,000 in upgrades and renovation, and sell a completed unit for $39,950. His first move was to fix up the exterior to make the unit look new. The exterior is the first thing a potential customer is going to see, so it’s important to set a positive mood.
People who don’t know anything else think they know how to look at roofs, so the next thing he did was to replace old wrinkled roofing. For 15 years or so, mobile homes have had pitched roofs; he installed dimensional shingles. He also installed house-type doors with bright hardware and entry lights as well as vinyl windows together with shutters or moldings, attractive skirting, and some small shrubs in tubs to accent it.
Each unit had a small front porch with wide, stable steps and banisters to make access easy. Homes in his model “village” were connected with mulch pathways bounded by low fences. From the street, his units really looked as if they’d been remanufactured.
In the interiors, he covered defects with paint, textured plaster, and lots of mirrors. To further brighten the interior, where needed, he put in light tubes to make it all seem bright and airy. He enhanced the effect by installing up-scale slatted wood blinds in the living areas and mini-blinds in the bedrooms.
Kitchen cabinets were re-faced or re-placed where necessary to make them look new and appealing. Counter tops consisted of 12” up-scale ceramic floor tiles cut to fit with bright under-mounted new stainless steel sinks and new fixtures.
If necessary, new plastic tub/shower combinations, toilets, and sinks and vanities were installed in bathrooms with new bright ware. Bedroom floors were carpeted, kitchen and bathroom floors were tiled with ceramic tile, and living areas and hallways were covered with new laminate wood flooring.
When I got down to brass tacks about buying several units at a reduced price for cash, he offered a package deal a little way out of town that included a very efficient small key-hole lot served by a large well and several jointly used septic systems where nine units could be set up in a circle around a paved court. This saved a lot of paving for driveways and gave plenty of room for maneuvering the units onto their spaces. The cost for the nine units plus lot would have been $495,000.
These weren’t individual lots, but the pitch was very appealing. Think of being able to buy nine rental units on your land that you could produce $7200 per month in gross rents. Or, you might sell them with seller financing for $39,950 with $3000 down for closing costs and a down payment, and held a 15 year Note for $38,000 at 8% and payments of $363.15 plus ground rent of $350 which would include water and septic.
They’d be responsible for any taxes, insurance, garbage, etc. costs. If you paid cash, your money would be earning about 15% on your investment, and when the units paid off, you’d still own the land. This would be especially sweet if you were able to pay some of the costs with tax-free money from a Section 1031 exchange.
