Good or Bad Deal?

[alexmorrow]

I recently found a mobile home that is for sale. Jim already told me what he thought of the deal, but I thought it would be good to talk about it on the forum and allow him to provide his response for new people to mh investing.

1982 Single-wide, 3 beds, 1.3 baths, includes washer, dryer, stove, fridge, and outdoor shed. New water heater.

$6900

Owner owes $6900 and her payments are $250 a month.

Is this a good deal or not? Why?

[Debbie]

I recently found a mobile home that is for sale. Jim already told me what he thought of the deal, but I thought it would be good to talk about it on the forum and allow him to provide his response for new people to mh investing.

1982 Single-wide, 3 beds, 1.3 baths, includes washer, dryer, stove, fridge, and outdoor shed. New water heater.

$6900

Owner owes $6900 and her payments are $250 a month.

Is this a good deal or not? Why?

That depends. Does it need work? If yes, how much work does it need?

Is it in good location? MH allowed to stay in the park?

$6900.00 sounds a little pricey for a 1982 MH, regardless of the 3 bdrms. If the MH is in pretty good condition with little or no work (fix up), I'd pay between $3500.00 to $4k in cash.

[Dan Auito]

Does it come with it's own land? What are rents going for? What's the vacancy rate in the location of the trailer? Etc... More info is needed here.

[Debbie]

"come with it's own land"????

DAN! That would be a FANTASTIC STEAL!!!!! :SM069: unless it's only a small pad.....

[alexmorrow]

Ok, more info on the deal...

Land is not included. No work need on the home. It's in an ok location and the MH park will keep it in the park.

[Debbie]

$6900 is still too pricey, IMHO.

For cash, I'd pay is $3500. $4k tops.

[Jim Johnson]

I recently found a mobile home that is for sale. Jim already told me what he thought of the deal, but I thought it would be good to talk about it on the forum and allow him to provide his response for new people to mh investing.

1982 Single-wide, 3 beds, 1.3 baths, includes washer, dryer, stove, fridge, and outdoor shed. New water heater.

$6900

Owner owes $6900 and her payments are $250 a month.

Is this a good deal or not? Why?
So without more information it is hard to know if your buying right... How about filling us in on your exit strategy. If you sold this home, how would you sell it, for how much and what is the relationship between how you sell it and how much you pay for it... or maybe how you pay for it... what is the top you would pay.. and support that argument with some sales figures...

[alexmorrow]

My strategy with this home would to just take it off their hands and sell it on financing terms. I'd sell it on 60 payments 338.20 a month at 15% annual interest. So minus insurance, I'd net 308.2 a month. Then subtract 250 and I'd get 58.2 a month in profit minus taxes. I'm not sure what taxes would take out but let's say 30%. So I'd make out with 40.74 in profit each month until the sucker is paid off. I'd reinvest the profit into paying off the home too. It would take about 23-24 payments to pay off the amount owed on the trailer. Once I pay it off, then I'd make 308.20 per month - taxes.

So it'd take about 2 years to pay it off. After that amount of time, I'd have a note on it for either 3 year left or a new note. For our sake, let's just say a new note is on it. So I'd make roughly 15,000 after five years of interest plus I'd make money on the principal as well (15k). So in total, I'd make 30k (15k for principal and 15k in interest).
Still good deal or not?

[F3Nelson]

My strategy with this home would to just take it off their hands and sell it on financing terms. I'd sell it on 60 payments 338.20 a month at 15% annual interest. So minus insurance, I'd net 308.2 a month. Then subtract 250 and I'd get 58.2 a month in profit minus taxes. I'm not sure what taxes would take out but let's say 30%. So I'd make out with 40.74 in profit each month until the sucker is paid off. I'd reinvest the profit into paying off the home too. It would take about 23-24 payments to pay off the amount owed on the trailer. Once I pay it off, then I'd make 308.20 per month - taxes.

So it'd take about 2 years to pay it off. After that amount of time, I'd have a note on it for either 3 year left or a new note. For our sake, let's just say a new note is on it. So I'd make roughly 15,000 after five years of interest plus I'd make money on the principal as well (15k). So in total, I'd make 30k (15k for principal and 15k in interest).
Still good deal or not?


What is this 250 for?

[Debbie]

What is this 250 for?

$250.00 is the current payment that the current owner is paying. This current owner still has a loan of $6900.00

[Debbie]

Alex,

It is to my understanding that you don't want a long term financing on older MH. Not to mention taking over the current owner's loan.

I'd say that this is not a good deal.

[Debbie]

If you truly want this specific MH, I can think of another alternative.

Pay cash for $6900. The MH is actually sold to you for $3K. The remaining $3900.00 is what the current owes you for paying off the loan. Get the title from the current owner. Create a note that with the current owner to pay you off on that $3900.00. Keep it totally separate from doing the "Jim's deal" with another buyer for say, $10K on whatever terms of the note.

BTW---to do the $3900.00 repayment from the current deal, I highly recommend that you charge between 6% to 8%. Reason? Should the current owner defaults, you want to look good to the Judge. In other words, your terms is not unreasonable.

[alexmorrow]

Interesting alternative. I've decided to pass on the home. I figure my money could be put to better use.