I came across this ad.
"i have a 12 foot by 50 foot mobile home for sale. it's an older mobile home model but in very good shape. It is presently rented , but the renters know i am trying to sell it and are ready to move out at anytime. It's got the best Directv for $50 a month and is a very quiet neighborhood.The price is $4250"
So I sent him an e-mail saying
"If I were to pay the
full price for this, and wanted to keep the renters, how much are they paying
and what would the cash flow be?"
He sent me back an e-mail asking for my phone number and later that night I got a call from him.
I asked him what the make and model was of the Mobile Home and he did not know accept it was a 1970's Helmet, I must have let out one of those "oh...." sounds because he asked me what was the matter. And I explained that my partner and I only buy mobile homes that are 20 to 15 years old, and right away he dropped $1,000 from the price. I knew right then I had a motivated seller. I then asked how many rooms and bathrooms and he told me it was 2 bed one bath, and then I asked him about the park and he explained it was really small had only 3 mobile homes on it, they all three shared the Direct TV and that was $65, the Water, and they all chipped in for the Mini Dumpster they used for trash and for and they paid $35 for that. I asked him what the lot rent was and he acted like he was confused. I realized he must own the land the mobile homes are on, so I asked him how much the renters were paying and he sort of recovered because he said the renters were paying $380, and the lot rent was $160.
I then explained that I was a Mobile Home Investor and my partner and I bought mobile homes based on the cash flow they generated and the lowers cash flow we would accept is $250 a month, and that his was only generating $120 a month.
***
A little side note here... my partner and I don't have two nickles to rub between us, but we have a list as long as our arms of people who want to lend money for the mobile homes after we have sold the mobile home. So it would be like they bought a partial note on the mobile home. More then one of those people said they would lend us money on the front end if we would pay a higher yield. I was offering 15% for back end, and just told people we would pay 18% on the front end.
The reason I was so put off by this deal was that a lone for 2 years at 18% for $3,500 payment would be $147.35, the $120 didn't cover it.
***
And then I asked something I forgot, I asked him where the mobile home park was and he said it was at a place next to a lake that is two hours away and it had a convince store across the street, a gas station next to that, and there was a fast food place across the street from them on the other side of the street from the mobile
And I said... "Oh, normally my partner and I buy mobile homes in a more urban area"
Again the seller acted like he was caught off guard, it was like it had not occurred to him that an investor would want to buy the mobile home.
And he balked... he dropped the price another $500!
I told him that I really wasn't sure we could make it work, but I would need to talk to my partner and that he and I would make a decision the next day and I would get back to him.
And I swear... he sounded like I was a long distance girlfriend who had told him she had met someone else and was conflicted over if she still loved him or not. (If you are ever in that situation... as soon as the words "I met someone else" come out of the mouth... it's all going to be down hill just hang up and do your best to let it go because it's already gone)
My partner and I live at opposite ends of the county, he is checking the mobile home parks at his end, and I am checking the mobile home parks at mine that way we have a really good coverage area, so we meet up at a KFC or McDonald half way between us once a week to touch base and more often if we have to discuss stuff like banking or anything we need to plan to buy.
I sent my partner the link with an e-mail explaining I didn't like the deal but I was intrigued by it because it was a good first deal to cut our teeth on if we could swing it.
The next day I explained to my partner what was going on, I logged into the website where the seller had his ad to show my business partner and the seller had changed his ad.
It now read:
i have a 12 foot by 50 foot mobile home for sale. it is like a 1970's model but in very good shape. It is presently rented if you want to use it as a rental the renters are paying $400, but the renters know i am trying to sell it and are ready to move out at anytime. It is already sitting on a lot which rents for $100 a month. it's got the best Directv for $50 a month. i mean you get all the possible channels. it is a very quiet neighborhood. There are only two other trailers on the lot. There is a Quick Trip right across the street and a restaraunt is just next door. I can send pictures if you want.
The trailer can be moved if you want.
Well thank you for checking this out, and i look forward to hearing from SOMEONE from oy there.
The price is $4250 or Best offer. i am really hurting for money in this economy.
My partner thought it was a go, and I explained it was in a town 2 hours away, and I was not comfortable with that. The other thing was how the broke stuff out for billing, I had to pull carpet from my house and I still am paying for the mini dumpster, it's only $20 a month, my water bill is $30, and my dish network is $75, but there was no real way to break that out of the mobile home payment so the buyer had to pay it instead of us to raise our return.
My business partner agreed and I told him that I was going to think about it and then contact the seller and see if we could work something out, he said that was fine and just to let him know.
I drove home, sat down with out the TV or Spotify on and it was just me and the cats for about 20 to 30 minutes trying to figure out a way to make this happen.
And here is what I came up with,
I e-mailed the seller and explained that my partner and I were really sorry but the price was too high for such an old mobile home, that I had tried to find a price for a 1970's Helmet Mobile Home but I could not even find a listing for a brand by that name, and then there was the distance from town that really threw us for a loop. That we had the idea the only way this would work for us was for us to buy the Mobile Home and then have him kind of manage it for us for like $50 a month, but at the price he had with the cash flow as it was we did not see how that was possible but we wished him the best.
And that was yesterday and he has not gotten back to me.
Honestly the only way I see this working is if the seller really drops his price to like $2,000 or $2,500. That way the payments to our lender can be between $100 to $150 a month for 24 months and if we can get the seller to agree to manage the mobile for like $50 a month.
That way we get between $45 and $50 a month, it's not a lot but it's like I was telling you before, by it's self it's a large combo pizza for the gang and some pay for view once a month, but if you do the same thing over and over again, 10 deals just like that is a car payment.
And that wraps up the deal we walked away from.
Wade
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