Property #2: First Mobile Home and Land Deal

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Welcome back to this second installment that profiles our mobile home and land deals to date to show you what’s working and what’s not working in our business.

Like I mentioned on the post about Property #1, I wrote about our first 3 deals in the Wobbly Boxes eBook so this post will serve as a summary of the deal as well as an update to where the deal is at now.

Here are the numbers:

  • Purchase Price:  $27,000 in November 2011

    • Basic Info:  24×76 (1700+ sq ft) doublewide in good condition with 4 bedrooms and 2 bathrooms on ½ acre lot  in a mobile home community (not a mobile home park).

    • Purchased as a REO

    • Funded using father’s/business partner’s HELOC

  • Repairs:  About $3,000

    • Included painting and cleaning that we did ourselves as well as the installation of an outdoor central A/C unit.

  • Total:  $30,000

We sold the home in January 2012 to our first buyer on a 30 year mortgage while they rented the land from us.  In total we collected $550 per month and $1,500 down.  I thought I would be rich off of this one deal ($550 per month * 360 months = ~$200,000), but in reality this was more like a long term rental where the landlord would give a good bit of freedom to the tenants/buyers.

The buyers stayed for a little over a year, paid late consistently, and then left in April 2013..  We collected about $9,500 in revenue in total and inherited the home in about the same condition as the day we sold it.

Before I move on to talking about the next tenant-buyer, I want to talk about how the first buyers left.

The Exit

This was a really tough situation where the man of the house left the family.  The woman worked a minimum wage job but didn’t really get enough hours to be able to afford our rent and take care of her three kids.

By April, they hadn’t paid March’s rent and had moved out of the home as the power had been turned off.  The problem was that she had left nearly all of their stuff at the home and would not go get it in a timely manner.  We had offered them cash for keys ($250 in exchange for cleaning the home up and taking their belongings), but she kept delaying doing this (over a couple of weeks).

Her husband had signed a termination of purchase agreement that we sent to both of them.  This made sure that they had no intention to occupy the home again so that we could re enter and do with the belongings what we please.

She had left us a key in the mailbox, so my dad, wife, and I spent several hours at the home loading all of their belongings into big trash bags that we then delivered to a storage unit and paid the first month’s rent on that unit.

If I could do it over again, would I have handled it differently?

Honestly, probably not, except for maybe hiring someone else to do the clean up.  I did not enjoy going through other people’s personal belongings.

I would have felt bad about throwing all of their stuff away even though we would have been fine legally to do so.  The storage unit only cost us $40 for the first month so it didn’t cost us that much extra besides a little time.

Finding The Next Tenant-Buyer

With some cleanup that we did ourselves, we were ready to sell to the next tenant-buyer.  We had had one waiting on our list who had already gone through our qualification process and was just waiting on us to find him a home.

We sold the home in May 2013 on a rent-to-own with the following terms:

  • $600 per month and $1500 down

  • During this time period, the tenant-buyer is paying off the mobile home while renting the land.

  • $300 of the monthly payment would go to lot rent and $300 to the home

  • Purchase Price: $25,000

  • Mortgage: $23,500 at 5.222% for 8 years at $300.00 per month

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  • After the mobile home is paid off, the land can be purchased with the following terms:

  • Purchase Price: $18,500

  • Mortgage: $18,500 at 5.104% for 5 years at $350.00 per month

**Note:  For a detailed discussion of why we sell our homes this way, check out the Wobbly Boxes eBook or the Training Course to Investing in Mobile Homes with Land.**

This tenant-buyer has continued to pay regularly each month for nearly a year.  So far, the buyer has paid us a little over $7,000.

Taking a home back is not something we hope for as we genuinely hope all of our tenant-buyers will pay us off.  But, we have been better off financially every time we have taken them back as our tenant-buyer’s terms restart yet our mortgage has been paid down considerably.

About Aaron Kinney

Aaron Kinney (Facebook) has been investing in mobile homes with land with his dad since 2011. He has begun sharing his business in the MobileHomeEbook Blog and has even written a book that outlines his strategies.

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