In November 2014 we had just gotten nearly all of the tenants from the 13 unit package converted to tenant-buyers and set up with our electronic payment platform. We were busy but felt ready to buy more properties.
I found this one on Craigslist. The seller was asking $18k for an older 2 bedroom mobile home on 2 acres in a great location.
The home needed a ton of work. Clean up, plumbing, electrical, and a well, just to start.
On my way out the door, I casually asked the seller if he’d be willing to do any kind of financing. He said he’d take $17k with $1,000 down and monthly payments of about $148 over 9 years at 0% interest.
I should have asked for a lower purchase price but with these terms, we’d have very little out-of-pocket. We’d also be able to share the seller’s well for one year (he lived across the street), thus allowing us to use our cash flow to pay for the new well.
The closing went by a couple weeks later without any delay.
We decided to advertise the home as a handyman special with just the first month’s rent due at closing while doing a minimal amount of cleanup and minor repairs. Because of the location, we had a ton of people look at it but it took a couple of months before we found a tenant-buyer. We also discounted the first three months of rent.
The tenant-buyer moved his RV onto the property and lived there while he fixed up the mobile home. We brought in an electrician to do some electrical work and put in the well sooner than we had planned, but otherwise were able to keep our out-of-pocket costs fairly low.
One of the reasons we put in the well when we did was due to the seller. In most cash transactions, the demeanor of the seller is not that important, but when you’re sending payments to someone and working with them on a shared well, it’s quite a bit more important.
It seems to me that our seller has a combination of alcohol abuse and personality disorders that made it difficult to work with him in regards to the shared well. He’d leave 5 minute long voicemails where his speech was so slurred and erratic that made it difficult to comprehend why he called in the first place. Luckily, those phone calls have stopped.
In 2016 we’re continuing to pay the seller monthly (there’s not much of an incentive at this point to pay him off early) while we’ve had the same tenant for about a year. Even though this wasn’t a fantastic deal, it’s been a steady source of cash flow and for us that’s the most important measure.