Mobile Home Investing: Over 430% Cash On Cash Return

Hi Dj

Thanks for commenting and for the kind words. I truly hope this site has helped give you value and clarity in this business. Please see my thoughts below. I have italicized my words and have left your words un-italicized to make it easier to distinguish between the two.

Hi John, I just found your site, and wanted to say it is very helpful. I found a mobile home 1975 2/1ba with nice porch and carport, brand new furnace,central air and connection box to utilities(spent $3k on that alone) They are selling for $3000 because the lot rent was raised up to $420. (city water, sewer & cable tv) It has been very well taken care of. Move in condition. She is moving to an apt closer to her work in another town, she has had it with them continually raising lot rent. She started at 5000, then down to 3500, and then offered it to me for 3k. My first thought when reading this is to warn you to not simply step foot into the seller’s shoes and purchase a home that will be hard to sell. This seller is asking a lower and lower price because the market has spoken, this home and park are not attractive – either in price, area, or look. If you purchase the home for free or next to nothing that is another story. You are right, the park does sound very greedy, not in-tune with the market, and disregards the concerns of it’s residents.

I have 5 acres that I could put it on, (I am renovating a doublewide on it now) but I think this is too costly to move such an old mobile. Wonderful! Congratulations with regards to your previous investing and the doublewide you already have. Is there a way to talk to park owners to lower their rate if you go in as investor? The short answer is Yes, you could simply ask this question point blank. Another way would be to approach the PM and owner logically and rationally in hopes to help them save what current relationships they have and current revenue they have. With that said the real-life answer and my deep down thought is this would fall on deaf ears. Much like working with a bank during a short-sale, they will only listen when the seller is in default or the park is already in the red. Does this make sense? I have been involved with dozens and dozens of parks and only when you purchase homes directly from a park office OR you add your own mobile home to their parks will they try to “encourage” you into the deal with discounted or free lot rent. In most of these cases it is the investor that negotiates it and not the park that offers. With all this additional info added my advise to you is to ask but do not get your hopes up. Parks are in a business to make money, period. I thought my son could live in it for now, as he works out of town and comes home on weekends staying with me, and I want him out lol 🙂 Lol. It’s about that time huh. 🙂 Those rents are very high for our area..and it is not even on the good side of town. A lot of people have moved their mobiles out..is that what owners do to get rid of old mobile homes? You answered your own dilemma. The home is older, it is only a 2 bedroom (not that 2 bedrooms are bad in anyway, just that 3 and 4 bedrooms are better for most buyers), the price is too high for the home and park, it is not in a good area, etc. I recently wrote a post on biggerpockets.com about not investing in parks that have very high lot rents as this will directly cut into your cash flow per month and obviously make the mobile home harder to resell. Raise the rent so high that people just abandon them? This is terrible. How helpless the residents must feel. Stick to investing in parks that respect their residents and keep to average or below average lot rents. Perhaps this park is raising rents in order to sell or some other ulterior motive.

Best,
John Fedro