What you need to consider - Posted by Chris - NC
Posted by Chris - NC on July 31, 2007 at 13:15:54:
You HAVE to know what repairs will cost BEFORE you agree to purchase a home at any price. You also have to know if the park will work with you, if there are taxes owed on the home (seller’s responsibility to pay these NOT yours) and if there’s any back lot rent owed (again, this falls on the seller). Then you HAVE to know what your market is for the home ie: what can you sell it for on a note.
If you haven’t been working the business long enough to know these things, then find someone in your market who does know them, decide whether this is a deal or not and go from there. If it’s not a deal, then you need to get out and look at 25 to 50 mobile homes, see what’s out there, see what they’re selling for, etc., then you’ll have a place to begin for the next deal. Also start finding out what repairs REALLY cost, materials and labor.
What to fix to make it a Lonnie deal are generally as follows:
First, can it be legally inhabited? (are there any code violations, major problems, etc., that would prevent you from selling, etc…)
Second, does everything work that’s supposed to? If it’s broke, what will it cost to fix it? (Plumbing, electric, appliances, heat/ac, etc. Know this before you buy.) If you buy the house, then you have to fix these things.
Third, does it look clean? If not, what will it take to make it look clean? (Usually 5 gal of Kilz and maybe some inexpensive floor covering takes care of this.)
Fourth, though this should actually be first on your list… is it a SAFE place to live? What’s the environment like?
Once you’ve got all these things in your favor, and the price is right, then it’s a Lonnie deal. That’s not to say that some repairs can’t be passed on to a buyer if they’re willing to do some work for a reduced price. Rarely does this work out to be a good thing for you though, cuz a lot of times they’ll promise the moon and then once they move in do absolutely nothing, or possibly even tear it up worse than it was trying to fix it when they really know nothing about repairs. Other things such as holes in the walls or worn carpet are a judgement call, you can fix them but in your market you may not need to.
I’d suggest you try to find someone in your area doing Lonnie deals and/or something similar and hang out with them as much as they’ll let you. Work for them for free if you have to, to pick their brain and learn the business. In the long run it could very well be the best education you ever received.
I can honestly say that some of the most profound changes in my way of thinking and looking at deals and this business came during casual conversations while I had a paint roller in my hand. From there everything changed!
Just my .02