We recently closed a deal where we made $11,000 on a used mobile home in less than 24 hours. And the interesting thing about it is that it was a mobile home on land.
Guys we want you to get thinking about dealing with mobile homes on land, especially if you’re just starting out. The opportunities are not just in mobile homes in parks. There’s a ton of opportunities in mobile homes on land, where these individuals are either purchasing the land or they’ve been the owner of the land for some years.
Some people are like ‘You know what? I feel like building a new home here’ or ‘I feel like bringing a new manufactured home to this parcel of land.’ And a lot of the time they just don’t know what that process is or they don’t know what the value of the home is.
It’s going to be your job to articulate what that process looks like. And if your offer is a little bit lower than what they’re expecting, just go ahead and educate them on why your offer is so low. As long as you’re being transparent and you’re speaking to them in terms of data, they will listen and respect it, and you will get the deal locked down.
A lot of our students have not dealt with mobile homes on land yet. So what we wanted to do here is walk you through the deal and analyze it for you guys so you can see our thought process, the deal details and how we were able to profit so much on the deal.
Step #1 Find a motivated seller
The first thing we keep an eye out for is a motivated seller.
As our students know, when we’re talking about motivated sellers we’re talking about sellers that need to sell their home. Not WANT to sell their home, but NEED to sell their home, in less than 30 days.
This seller actually contacted us about the property and we really wanted to help him. He had bought a parcel of land and there was a mobile home on it and he needed that home to be moved.
He was going to do something else with the land and it was just there. So he was pretty motivated and he needed the home to be moved in less than 30 days so that he can start his next project.
He also didn’t know the process or the value of the home. So this is the perfect opportunity to come in and help serve him. We’re not looking to take advantage of the seller. We’re just trying to assist him. Assist him with his needs.
The seller did not have the actual physical title to the mobile home since this home was affixed to the land. He never went through the process of actually getting the title from them.
The home was 3 hours away from our nearest boots on the ground, the people in our network who could assist us with inspecting the home and running point on the deal.
The seller was also looking to shop for multiple offers because he knew there was some value to the home so we knew we had to give him a competitive offer.
Step #2 Evaluate the property
The second step we did was actually look at the home itself and figure out if this is a home that we can help him with and if there is a high demand for it.
We looked at the details of the home. It was a 3 bedroom 2 bathroom. It was built in 1991 and it was double-wide. We know these homes are in high demand out in California and Arizona.
By speaking to the seller over the phone we knew that it didn’t need too many major repairs on it. There was some rot around the windows, the interior needed painting, the master bathroom tub needed to be replaced, and there was rot in the bathroom floor.
Their interior, the flooring was nice. It really just needed some paints and cosmetic work. Overall, it was in good condition.
The previous owner definitely took really great care of this home. You can tell there was some pride of ownership. The home was pretty much ready to go once the bathroom tub was replaced.
The seller also said he would leave the appliances in the home. They were nice stainless steel appliances, which we know our buyers love.
One thing you want to do when you’re dealing with mobile homes on land is always make sure that the AC is staying with the home. An AC can cost you anywhere between $3000 to $5000, even for used units. Luckily the AC came with the home on this deal.
There were no liens and the taxes on the home were paid up to date. His asking price was about $20,000 negotiable for this home.
Step #3 Evaluate our exit strategies
Option 1 Moving the home to a mobile home park
- We know that we can resell the home to another park and get the most revenue. Somewhere between $35,000 to $40,000. We will be responsible for those repair costs and the cost of the actual move of the home.
- We will build a relationship or improve our relationships with the park manager, park owner and movers because we’re bringing value to their business.
- We can keep that property in the park and find a buyer who will pay us passive income as well.
- We know this is going to be a large upfront investment with buying the home, making the repairs and moving the home as well. All of that is coming out of our pockets.
- It’s a huge energy investment. There’s a lot of steps involved and far as managing this deal and getting it completed is concerned.
- It also requires a lot of time invested. We know this could take about 60 days because we need to schedule it with the movers and we need to find an empty Lot in a park that fits the dimensions of our home.
Option 2 Find a buyer that will move the home for us
- We can resell this home very quickly by getting a buyer lined up. This can be done even before we possess the title of the home. We will sell it in its current condition without doing any repairs.
- It’s a smaller time, energy and monetary investment. All we have to do is negotiate a price with the seller, and then turn around and resell it to our buyer..
- We don’t have to pay any moving costs. We don’t have to manage the move. That whole process can take a lot. Once we sell the home we will recommend a reliable mover to the buyer and leave them in good hands.
- Showing the property to these potential buyers is going to take a lot of time from us and time from our boots on the ground.
- We need to trust that the buyer will move the home by the seller’s deadline, within 30 days. It’s out of our control at that point.
- If the property was damaged during the move, the seller would come back to us for recourse. We’re putting ourselves at some risk by allowing the buyer to take control of moving the home.
Option 3 Brokering the deal
- We can actually be more transparent with the seller about how much we’re going to make on the home. Usually our broker fee is anywhere from $2000, all the way up to $5000 or $6000 a home.
- It doesn’t involve using any of our money. We are leveraging our knowledge and leveraging our time, instead of leveraging our money.
- We’re not on the hook for any moving costs or management.
- The seller is happy because they’re going to walk away with the most money.
- With a non-exclusive listing agreement the seller can cancel the listing agreement if he finds a better offer. Usually when we’re doing our broker deals we know we’re on the clock. We try to get this done as soon as possible.
- Our commission on this will only be somewhere between $3000 to $6000. Compared to our other options we’re leaving a lot of revenue on the table.
- Since the seller wants a high price for the home, they’re asking for a number that’s closer to the retail price. And it may take longer for us to actually find a buyer for this deal.
We chose option 2
We sold this property to a buyer that wanted to move this to their own private land. And we negotiated the purchase price.
We actually purchased this home for $14,000 whereas he was initially asking for $20,000. But because we’re dealing with a motivated seller that just wanted to get it off his property we had room to negotiate.
We ended up selling it to a buyer for $25,000. We actually met them there on the same day that we purchased the home from the seller.
We sold it to the buyer on the exact same day and so we were able to make our $11,000 profit. And when we’re talking about WE we’re talking about our boots on the ground. Our partners in the mobile home investing community that we rely on to act on our behalf in locations that we can’t reach quickly.
We got this deal wrapped up in less than 24 hours. And the reason this is possible is because we’re constantly running test ads to understand the price that the market can accept and to identify potential buyers who we can add to our buyer’s list.
It’s always good to be building your buyers list so that when you come across opportunities like this, especially with mobile homes on land, you can move them fairly quickly.
When we went through this case study live with our members a lot of people said they’d take option 3. And they’re not wrong for that. That’s perfectly fine.
It’s just for us, we look at it like, ‘How can we get this deal done as soon as possible? How can we serve our buyer?’
This buyer was hungry for homes and he has the money ready to go. But he had missed the last opportunity with us because we sold the home so fast. So by turning this home over fast we’re maintaining a great relationship with our buyer and also bringing some revenue immediately to our boots on the ground.
The buyer actually bought the property for under retail price. Honestly, the price should have been around $30,000, but we dropped it a little bit just to have a quick sale. And we’re happy because we made our $11,000 profit in between.
Just for the record guys, whenever you’re selling a home to a buyer that needs to move, you want to check in on the seller, check in on the buyer, and just make sure everything is running smoothly.
We’ve run across investors where they get the money, they get the check, and they’re just nowhere to be found during that entire moving process.
Even though we don’t need to manage the move it’s all about doing the right thing, especially if you’re in this business to get testimonials. Just go that extra mile and make sure everybody’s taken care of along the way.
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