Run, don’t walk to the nearest exit (long) - Posted by Dr. B. (OH)
Posted by Dr. B. (OH) on September 16, 2011 at 08:03:45:
Brian,
Congrats for getting off the couch. That is the most important step. Now take smaller steps.
Let me address your questions 1 by one.
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What’s my risk of “buying” these?
Tremendous.
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Who will do the work? I do a LOT of the work myself and have two occasional helpers. One has been with me for 7 yrs. He works so fast and well, I had to increase his pay to $20/hr. under the table to keep him coming back. The other is $15/hr. and also excellent. This year I paid another (recommended) guy $15/hr. because the other 2 weren’t available. He did very good work and didn’t take unnecessary breaks but still took TWO TO FOUR TIMES longer than my other guys.
3.Where will I get materials?
Prices for materials has gone up tremendously. Unless you can source a steady and wide supply of used materials, as Mike says, you will have at least $4000 in one of these. Over the past 8 yrs I have spent an average of 1,847.74 in materials on 22 “free” homes. Over the past year it has averaged 4,863.78. Two of which I lost $$ on (and I’m experienced!). My overall average repair cost for 104 homes is $1383.37. With an average purchase price of $1,725.93 added to the $1383.37 in materials, that means I’ve put an average $3109.3 into each home with a range of as little as $170 (sold for $900) to $12,776.52 (sold for $12,000) NOT including 30-90 hours of my own or others’ labor per home!
4.Should I take one, or all of them?
None of these. Never take more than one fixer upper at a time when you only have 3 mos. to repair. If you had 6 homes available with three mos. grace per, you would have 3 mos to get them ALL done, or one at a time, 18 mos. (3mos X 6) to get them done in series.
5.Problem…the park manager she is not interested in chasing down the title since the previous owners all split.
Problem, Problem, PROBLEM, PROBLEM! If your state has titles to trailers, YOU MUST HOLD TITLE or you have ZERO, ZERO, ZERO control. P.s In most states, only the landowner can apply to the state for abandoned title. Apparently your park does not find it worth it for these homes.
6.What’s my exit strategy or best plan in general?
Not owning the trailers gives you no exit strategy as there is no entrance strategy. Owning ANY structure on someone Else’s land, gives you limited control. In this case, just fixing structures on someone Else’s property is just giving them free money. You will end with a headache, broke and having fixed THEIR problem.
All that being said, stick to manageable homes with MOTIVATED SELLERS. If that first deal you saw for $4200 is being sold by the park, run away from that park altogether. Even if that home is being sold by an individual, you have to wonder who wants to pay decent money and live in a park with 5 wrecked homes? How much can you realistically sell that home for on contract? Lets say $4000. Then, in that park, I would not pay more than $1000 for that particular home. What is the seller’s motivation to sell? Wait until they are even more motivated. As has been said before, you don’t have to buy anything tomorrow, next week, or next month but the seller may need to get out in 3 weeks. Wait them out or let some greater fool buy it for more money.
Steve