Posted by Kelly on July 14, 2007 at 09:57:13:
I think Ryan has it right, check with the zoning board to make sure the sale won’t trigger anything adverse.
another exit strategy is looking at separating the land home deal? what will the lot bring by itself, probably over your purchase price if it is surrounded by stick built homes. Move the mobile somewhere else or sell (even give it away) to be moved and then sell a ready to be built lot with utilities in place.
The One-Way-Out L/H Deal - Posted by Keith (OH)
Posted by Keith (OH) on July 13, 2007 at 20:03:42:
Stumbled on to a mobile home sitting on a lot in the middle of a SFR residential neighborhood. Clearly not zoned for mobiles but has been grandfathered in to remain.
I wouldn’t normally consider a deal like this because there is really no upside. The home would not be allowed to be upgraded with a newer home. The home is to old to try and get any cash-out via financing, plus title has not been retired and no real appreciation. I can only figure one way to make money on this home and that would be as a cash cow rental. Despite the limited exits I was still interested, so I researched the out of town owner and called.
He is ready to dump it. I kinda figured that by its looks. I asked him what kind of price he was looking to get out of it, “Well I’ll consider anything around $2500.” This is for the land and the home. I bet I can get it for 1K. I called my handyman and we went and took a look. It was in “workable” condition (minus the fleas). A large 2 bedroom used to be 3. I figured about 3K in fixes and I could get $400-$450/m. Looking for other perspectives on this deal.
The funny side to this story is I used to own a rental 5 houses down the road and never noticed this home. It is true, you can’t see those mobile homes unless your looking for them !!
Keith
Maybe buy it in an LLC… - Posted by Greg Meade
Posted by Greg Meade on July 14, 2007 at 18:51:52:
for some added protection. My pesky mind wonders why none of the adjoining proerties bought this land and removed the mobile and gave themselves a fully improved lot to build on or?. If I lived next door I would sure jump on it.
The LLC approach gives you another exit…if it turns to dust, deed in lieu for taxes and keep personal credit intact. An LLC online is less than $300.
Sounds like a great deal, please post results.
Greg
It’s a Land Play - Posted by Tony Colella
Posted by Tony Colella on July 14, 2007 at 15:09:15:
As my friend Daphne Lowe might quickly point out, this is a land play type deal.
From a land/home perspective you are using the cash cow single wide to rent and pay for the land while the land itself appreciates.
You might hold it for years like this and make a nice cash flow from it. What would it rent for as is and what if you made a doll house out of it?
Seems to me that in most any rental area the rent would pay back the $2,500 for the land/home in little time.
From there you are looking to sell the land in a variety of scenarios. Your market will be stick built buyers, not mobile home folks.
You want to market the lot to folks who want to build in an established neighborhood. Small builders like these kind of lots quite well.
You may even look to sell to a neighbor who would love to get rid of that trashy “trailer” eye sore. You could even owner finance the sale to continue the income stream for years to come and reduce the tax bite. This may be another reason to rent it for a few years first.
Due diligence as usual is necessary and mentioned here. Other than also checking deed restrictions, the others have hit on the hot topics but be sure to do all due diligence as usual.
Tony
More DD needed - Posted by Ryan (NC)
Posted by Ryan (NC) on July 14, 2007 at 09:29:19:
I lost a smoking deal a few months ago because of the city ETJ zoning… Very similar situation but price was a bit higher.
Went to closing table and the seller was on the up and up and handed me a statement from a dinky township zoning department saying the MH had been classified as abandoned (triggered something in the title search) and it had to be removed in 30 days cause the power had been off for 180 days. They banned the power from being turned back on and to make it worse the township’s ETJ zoning person had banned the placement of ANY mobile homes on the lot including V/S DW’s which is what we planned to replace it with… Everything in the county zoning and everything I knew to be true said that I could do what I wanted but the township folks that I didn’t even know existed and had to sign off on the permits said NO.
Make sure you know what you are buying right and have a couple exits, as Jeff pointed out there is more than one exit just make sure they are viable.
Best wishes,
Ryan Needler
Re: The One-Way-Out L/H Deal - Posted by Glen (OH)
Posted by Glen (OH) on July 14, 2007 at 09:13:09:
Keith,
In my township, mobile homes are absolutely not allowed unless they excede a certain square footage, are DW, and have a “permanent” foundation. Check with your zoning authorities and you may get a happy suprise.
Good luck with a great sounding deal!
Glen (OH)
Due Diligence time - Posted by Don-NY
Posted by Don-NY on July 14, 2007 at 07:48:02:
Can’t replace the home? That is what “everyone” in my town thought about a L/H We bought (and proceeded to tell me whenever they found out we owned the place). I went and checked at the town offices. And low and behold they changed the law 4 years ago to address the manufactured home industries advances in quality and the affordable housing part of the town master plan. (not to mention New York states new regulations) So you may be suprised what you can do.
Re: I see at least 3 ways out - Posted by JeffB (MI)
Posted by JeffB (MI) on July 14, 2007 at 06:31:26:
There are at least three other possible exits besides the rental method you identified:
One of the subdivisions I am buying L/H properties in has some vacant lots, and I’m buying those with the intent of selling them to neighbors on L/C terms, so they can have double lots or big garages, etc. They are hillbillies, so this appeals to them. I can also develop the lots if I feel it’s worth the effort.
Even without knowing your market, if you’re buying a property for only a couple thousand I have to think you have many exit strategies.
Keep us posted!
Jeff
Re: The One-Way-Out L/H Deal - Posted by jimAl
Posted by jimAl on July 14, 2007 at 24:27:30:
Sounds like a sweet deal. Make sure that you will be allowed to continue to use it for a housing unit. In some areas if the power has been off for a certain length of time(often one year) you lose the grandfather status. You can rest assured the neighbors are watching and would like to see the mobile removed. Good luck. This one could be solid money maker if all goes well.
benefits of screwing the tax man - Posted by Steve-WA
Posted by Steve-WA on July 14, 2007 at 21:53:49:
in WA anyway, a tax foreclosure does not affect one’s credit.
I’m just sayin’
;-)3