Re: I Switched to Mobile Homes - Posted by Ryan (NC)
Posted by Ryan (NC) on May 28, 2006 at 23:37:59:
These deals are common once you start looking for them, the lack of financing for the older homes creates more motivated sellers on homes that still have a high demand in the market. Once you’ve done a few deals it is extremely easy to create deals that yield 50% to 200%+ cash on cash returns and higher cash flow than most SFH Deals with less risk in my opinion.
Off the top of my head here are just a few of the deals that we’ve done in the last few months…
89 2/2 nice condition, purchased for $2500 L/O collected $1000 option money and the tenant/buyers decided to move and gave the home back the next month. (which still baffles me) L/O?d again for $9500 w/ $750 option consideration and $250 per month for 48 months $950 Buy out and end of term. Total of all payments $14,700. Profit $12,200 / yield around 400%
92 Fant 2/2 Excellent condition paid $2000 plus move and setup expenses of 2500, add an extra 350 for a few misc. repairs, paint, and a stupid mistake I made involving the hot water heater and we have a grand total of 4850 in the home. L/O’d for $14,500 $1000 option consideration and $265 per month for 90 months option buyout 1450. Total of payments $26,300. Profit $21,450 / yield 82.46%
89 Fleetwood 3/2 in good condition paid $3800. L/O’d for $11,300 with 2000 option consideration plus they pre paid the first 2 months rent which was really nice. Our payments are $265 per month for 65 months option buyout is $1130 putting the total of payments at $20355. Profit $16,555 / yield 176.65%
74 Conner in good condition, paid 2750 plus 40 for a window L/O’d $5800 with 500-option consideration and 150 per month for 60 months, option buyout 580. Total of payments 10800. Profit $8010 / Yield 77.21%
90 Oakwood needed some minor work, which turned into a bathroom remodel in a not so nice park. Purchased $3500 repairs 650 total invested $4150. L/O’d $8900 w/ $750 option consideration $235 per month for 44 months option buyout $890. Total of payments $11980. Profit 7830 / Yield 79.21%
These examples assume that we’ll never get any of these units back, which from my experience is highly unlikely. For a case study on what happens if it don’t work out I’ll use the first unit we purchased about two years ago.
93 Redmond 3/2 ok condition. Paid 2750 plus 667 in back lot rent, Sold on a note for 7800 12.75% w/ $500 down and payable 225 per month for 36 months. The buyers paid for a year and left taking the hot water heater with them after we collected 3200 in payments… Repaired for 180 plus 125ish to recover the kitchen floor. Rented it for 2 or 3 months at 260 /month and got it back again. L/O’d again for $9300 with $750 option consideration and 270 per month for 60 months option buyout 930. Total payments if this money pump finally dies with this tenant/buyer $21,600. Total profit 17878 / as for the yield I’m not even sure how to calculate it at this point but as Lonnie says it?s ?Good Enough?
Then there are the parks, which will be spitting out right at $2500 per month by the end of July. There is little ?Pride of ownership? to owning a bunch of old MH?s, but the chance to spend today fishing with my wife and kids instead of spending 10 hours in what used to be my office and still coming home to find a check in the mail box beats pride of ownership to me any day of the week.
Hope to see ya in August.