You described the exact situation I’m afraid of. I’ve spoken with a couple of sellers in this park and they can’t sell at FMV, even with FINANCING, simply because the lot rent is so high. The lot rent went up by $25 on Jan 1, but they can’t afford to move out without selling. Since the rent went up the value of the home drops since they are complimentary goods (Econ 101).
There are plenty of parks around so I’ll do some more investigating before I leap. Thanks for sharing your experience with me!
Spoke to a mh seller who is asking $2500, but is very negotiable, for an early 80’s 14x70 2/2 in a fairly nice park. She mentioned that she had many lookers, but no takers since the lot rent is (hold on to your shorts!) $487 per month. In this area a 2 bed apartment rents for about $600.
I may still pursue this deal since she is so negotiable however, the lot rent scares me as far as finding a buyer is concerned. Anyone have experience with huge lot rents or comments on how to approach this sort of deal? Should I approach the park manager and ask if lot rent is negotiable? Should I say NEXT to the park in general?
Thanks for your help and see you in Dallas (yeah, I know, unless you see me first!).
Posted by David S on January 24, 1999 at 18:18:02:
Hi Drew,
I tend to agree with the others. I would however, invest about 15-20 bucks and run an ad to see if you come up with any takers. You may want to get an ‘option’ on the home, nothing serious, but giving you the option to buy the home for ‘whatever price’ you agree. This would be a low cost (10 bucks) option as you could also give the seller the right to sell to anyone else during your option period… doesn’t seem you will have anything to worry about.
Try the ad, talk to a neighbor or two and see if they have relatives, friends, etc that may want to relocate.
Good way to get to know the area with little cost to yourself.
Posted by Dan (NC) on January 24, 1999 at 08:43:04:
We have a park just like that in Raleigh, lot rents twice as high as some parks, home don’t sell, but all the lots are full. And many of the homes are empty. A lot of finance companies are paying the lot rents because the buyers have skipped out and who wants to move a home? I made the mistake of buying a home there last September. It was a great home at a great price, and anywhere else in town it would have sold in a week. It finally will be sold Feb. 1st. I’ve paid 5 months lot rent and had to drop my monthly payments dramatically because so few people have enough money for that park. I vowed I’d never buy in that park again, unless I had a buyer already lined up so the rents don’t eat me alive. Please be careful.