HELP: Need advice on potential 1st Mobile Home deal … - Posted by Robert W. Smith, Jr.
Posted by Robert W. Smith, Jr. on June 03, 1999 at 19:30:39:
I found a mobile home listed in the newspaper today for $8000. It’s approximately 25 years old. This is extremely reasonable in my market. It’s 2 BR and 1.5 BA and unfurnished. The owner is an elderly woman who has already moved into a rent controled apartment elsewhere, and her next lot rent payment was due on June 1st, with her grace period being June 10th. She hasn’t paid this payment yet… no doubt hoping for a quick sale before she has to pay June’s rent.
Here’s what I’m thinking of trying. Please give me your feedback. I’m thinking of offerring $5000 explaining that it’s cash, and I can settle as early as yesterday. There are also some repairs that need to be made that they pointed out themselves. The shower area has duct tape around the seems… not a real good sign. The bathroom ceiling is sagging and brown in one corner where they say a leak was repaired but never patched and painted. They also said that the washing machine works but needs some sort of correction to the plumming. If she takes it, I think that I could sell it for about $12,000 AS IS, hoping for a down payment of about $2000 and holding the note with monthly payments of about $225 for 60 months. The return would be exceptional.
My concern is the lot rent, and I’m wondering if it will be a big disadvantage as I try and sell. The park manager told me that he “wasn’t sure what the lot rent was, he’d have to check, but he thought that it would be about $425/month.”
Trust me that this is high for our area. A nearby park which is much, much nicer is only charging between $315 and $350 per month. Of course I brought this to his attention during our discussion. Believe it or not, it’s the park managers wife that is trying to sell it for the little old woman as a favor - I’m glad they haven’t thought of doing the “Lonnie Deal” themselves!!
I’m concerned that potential buyers may be uninterested in the purchase because they’d need to shell out about $650 per month between the lot rent and the monthly payments. They might be able to find a nice two bedroom apartment for $750 a month.
As a frame of reference, there are other similar mobile homes selling in this park for $15,000 and $24,500. There is a somewhat newer mobile home, about the same size, and about 8 lots down the street that is selling for $47,500 and its only 1BR / 1BA. That’s why I think this deal is workable, but I thought I’d see if anyone had any advice on the best way to structure the deal. Anyone have any luck negotiating lot rent? It seems funny that the park manager doesn’t know the lot rent… makes me wonder if he’s trying to feel me out, wondering what I’d be willing to pay.
Any advice is appreciated. I’m hoping to have some good news of a profitable first sale to report to the group in a few weeks… we’ll see!