Posted by Jacob on March 20, 2000 at 17:20:47:
Hi Jay,
You are in the right place to ask this question, and it is a legitimate one. It’s too bad you were not in the chat room last night, as myself, My very good friend Tony, Gator, and several other experienced investors were discussing mh investments. Jason in Va even compared them to sfh’s.
Here’s the scoop. First off, your friend may or may not be renting them out. He may be carrying the financing. Even if he is renting them, it’s simple math. If you buy a unit for $10,000 (much higher than usual, but you are in SoCal after all) and rents it for $300-400 a month, that adds up to $3600-4800 annually. You are talking about gross rents in the 36-48% range. (Percent of investment, or cap rate.) That’s about 3-5 times what one could expect from a sfh. In that market, you are hoping to get 10-12%. Big difference.
Also, if one buys a unit for $1000, and sells it for $1000 down and $250 a month, is that a good deal? Good enough, according to Lonnie.
For me, even better is the fact that mh deals are far easier to do. (See my below post entitled “A sheepskin can be an anchor” and the responses below it.) Far less hassle, with those kinds of returns.
I barely scratched 1 millimeter below the surface here. My suggestion would be to read some of the success stories here. Lonnie’s articles are excellent as well. They might give a better run-down than I did.
Jacob