This one has actually turned into our best deal to date, but if you had told me this when I first saw the property, I never would have believed you.
Here’s the numbers:
5.2 acre property in a city that we really like (typically sell homes within a week of marketing them) with two mobile homes:
1st mobile home (in picture): ’98, 14×80, 3 bedroom and 2 bathroom home in pretty good condition. It just needed a good cleaning and some minor repairs.
2nd mobile home (about 75 yards in front of the first home): ’96, 14×70, 3 bedroom and 2 bathroom in decent condition. It needed flooring in the kitchen and living room area but wasn’t too bad.
Asking Price: $35,000
I had found this one on Craigslist and called the seller to ask him about coming by to check out the property. I asked him about the repairs needed and was pretty consistent with what I saw. I should have made a “soft pass” before viewing the homes( a strategy where the buyer makes a low ball verbal offer to test the seller’s motivation), but I didn’t.
After seeing the property, I really didn’t care for it. I thought the homes were too close together and would be difficult to sell. I figured that we would need to be around $25,000 and felt that there was no way the seller would come that far down.
I called the seller back and told him that I would need to be at $21,000 to make this work. With a little hesitation, he countered at $25,000. Whoa! I told him I would talk it over with my dad/partner.
I was ready to stay firm at $21,000 but my dad wisely suggested that we counter at $21,750. The seller accepted the counter.
Purchase Price: $21,750 ($13,250 or 38% reduction from the asking price)
One thing to note:
Try to make the other party feel good about the transaction without hurting your numbers. An extra $750 was not enough to kill this deal for us and I believe that it helped the seller feel like he negotiated the deal well.
Selling the Homes:
We sold mobile home #2 within hours of closing on the property. The tenant-buyers had completed our qualification process for a previous property, but we went with another family for that property who had more stable income.
The tenant-buyers for mobile home #2 were willing to do almost all of the repairs and we were willing to take a smaller down payment (just the first month’s rent or $600). This strategy can definitely “back fire” but we believe that we are almost always better off if the tenant-buyer greatly improves the home. (We do hope that they will finish paying off the home, but the truth is that very few will so we hope to get the home in the same or better condition than the day we sold it.)
We sold mobile home #1 within the next week. We took a smaller down payment on this one as well as we discovered more repairs than what I had found, but in the end, it should be a win-win situation for both of us.
Both families were concerned about being close to the other, but this didn’t affect their final decision like I thought it would.
Our revenue on the total property will be $1,200 a month for several years, which is going to be a great boost to our business.