Mobile Home Makeover and Flip, Without The Makeover

Welcome back,

Last week I was able to respond to a great newbie mobile home investing reader/question that read, “Am I able to purchase a mobile home that needs repairs and resell the home for a profit without making any of the repairs on the home before reselling?”

The short answer is Yes…, however let us dive deep into this question and answer to find out why this is and how value is created with regards to mobile homes.

First things first…

First thing to make sure we all understand is that in order to grow a long-term investing business with great word of mouth advertising is to sell only Win-Win mobile home deals. This means that although the condition of the mobile home may not be 5 out of 5 stars, that the price and terms are affordable and attractive to the end user. In no situations should an investor ever omit repair information or fool a buyer into buying a misrepresented mobile home. Now that we are in agreement there let’s move forward.

How to create value with mobile homes? Only a few methods are listed below.

1. Buy, Fix, and Flip:

Perhaps the most commonly thought of method is to increase the value of an investment mobile home is via making repairs and sweat equity. If a mobile home is worth $5,000 with repairs needed, then surely making some or all of the needed repairs will justify a higher retail price once repairs are finished. This is a common method of increasing value that most investors already understand.

Related article: Mobile Home Before and After Rehab Pictures

What other ways are there to increase value of a mobile home…? Let’s discuss some of them below.

2. Move the home to a better location:

If the mobile home is inside of a park and the cost to move the mobile home fits into your figures this is a very valid way to increase value of the mobile home. Perhaps you are moving the mobile home from a rundown park to a 5 star park or perhaps you are moving the mobile home from an inland small town park to a bustling ocean side park. Both of these moves will typically create a higher resale demand and therefore a higher resale value, equaling profit for you.

Typically Higher Demand = Higher Resale Terms

3. Add more homes to the land if possible:

If you own a mobile home on private land you also own then perhaps the zoning of the land and the size of the parcel allows for additional mobile homes to be a added to the property. In many cases this can increase resale value and cash-flow potential.

4. Sell via monthly payments:

When buyers cannot or will not turn to banks or credit unions to finance their new/used home purchase then selling via payments* can increase the purchase price of a mobile home out of need from your buyer. Said another way, no matter how you purchase a mobile home, when you resell the home for monthly payments you increase the amount of buyers interested in the home. There are several adequate rental property software programs available that can give you a better idea. Ultimately though, this increase of demand will typically increase value and your asking price, in addition to charging a premium for this service and added risk.

*Selling on payments is a vague term that includes lease options, rent to own programs, owner financing, and other installment-payment methods. Some of these methods are legal, frowned upon, or illegal in many areas due to new laws and acts. Selling via payment is still possible however please make sure to follow all laws and rules when selling via payments or terms of any kind.

Related article: Mobile Home Investing Safe Act Teleseminar

5. Finding the property is key:

If you were paying attention above you may have realized that we really have not discussed the original question’s answer yet. Can we buy and resell a mobile home with making any improvements to the home? Yes, and this answer stems from the act of finding and securing (purchasing or obtaining a signed purchase contract) the subject mobile home.

As investors much of our job is to help local sellers by attracting, finding, negotiating, and securing a valuable mobile home typically undervalue of the retail price. Realize that once you find and buy a mobile home below value that you have captured this value immediately.

Let us look at this another way. Perhaps you know you can resell a fixed 3/2 mobile home in a park for $20,000 with payments. If and when you find and help a seller that will sell their handyman home for below value today, you have locked in the value create between the retail price and what you paid. Once you own the home you may now resell in property an a fixed, clean, or as-is condition for a higher price or terms if possible.

Selling for cash may be difficult as your previous seller was trying to sell for cash, so you will need to market better than the previous seller if you are aiming for an all cash or bank financed sale. If you rehab the home slightly or all the way you can rationally increase the sales price. If you resell for monthly payments you will increase the value and therefore increase the sales value/price. However, if you truly did buy the home at the right price, and only a handful of repairs are needed you may choose to fast-turn the manufactured home or even wholesale the contract to a buyer for a higher price than you paid without making any need repairs.

Conclusion: We can talk about this for days so if you have any questions comment them below, private message me, or email me personally for fastest reply. As mobile home investors it is important that our reputations speak for themselves. By investing correctly and with active daily consistent effort a sizable local business helping buyers and sellers is very possible, however only with correct understanding of your market and win-win-win deals.

What do you think? Comment your thoughts and questions below.

Love what you do daily,
John Fedro

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