Buying Repossessed Mobile Homes One way to increase your occupancy and cash flow is to buy repossessed homes so that you can fill up your park. Many mobile homes have been repossessed over the last three to four years due to the lenient mortgage practices of the late 1990s. Many of these homes are being sold now at 30 to 40 cents on a dollar of the actual loan balance. Many states in the U.S. have a plentiful supply of mobile homes, such as the Midwest and Southwest. In the Southeast and Florida, repos are still available but harder to find due to the hurricanes. Still, nationally there is currently a plentiful supply of repossessed mobile homes.
When you purchase repossessed homes from the bank, you purchase them "as is". The two largest banks selling the lion's share of repossessed mobile homes are Vanderbilt and Greentree/Conseco. There are many smaller banks selling mobile homes however Greentree and Vanderbilt are the largest. "As is" means that you purchase that home in whatever condition that you find the home and that you are also responsible to pay any back taxes and any overdue lot rent. It is important to make sure that you buy a mobile home that is in good shape and that you're not buying something that needs so much work that it becomes cost prohibitive. Buying repos that are in bad shape can be very costly. When I first started buying repos I was dealing directly with the banks and was basically just buying on price. However, I realized very quickly that it would cost me more to rehab a badly damaged home than to buy a repossessed home in good shape. But more importantly, the holding time was very costly. Some of these homes took us two to three months to get them prepared and completely rehabbed. Whereas if we had just bought one that was in really good shape and only needed cleaning, we could've probably had the home on the market within about seven days. In the beginning, I was buying repos off of the internet from 2,000 miles away. The banks provide pictures and details of the home within their website. However, I found very quickly that a lot of times the pictures look really good or sometimes even better than the actual condition of the mobile home. I realized that it is critical to have somebody go out and complete a physical inspection. We have found a mobile home dealer who we pay $500 per home to find mobile homes for purchase. He completes all the physical inspections and determines what the back taxes and lot rent due. He also ensures that the home is in good shape. He will provide us pictures and inspection report so that we can decide whether to buy the home or not. We have found that the $500 is money well spent because it has saved us a lot of time purchasing homes, doing the physical inspection, determining back taxes and lot rents, and all of the other time-consuming parts of investigating/buying repossessed homes. Once you purchase a repo home you will want to move it very quickly to prevent theft or vandalism. We disconnect the exterior AC unit and place it inside the home. We also change the locks to minimize any further damage to the home. Repos are definitely a great way to fill up your park. You can sell the repo for a significant markup to your buyer. We are buying most of our homes, including rehab and setup for about $12,000 (SW) and $16,000 (DW). We sell the homes for $19,000 - $20,000 (SW) and $25,000 - $30,000 (DW). These prices are based on Texas and will vary for your market. We also charge anywhere between 10% and 14% interest rate on the financing. The longer the finance period the greater the interest rate. For 10 year loans we are currently charging 12% and anything greater than 10 years is 14%. By purchasing the repossessed home (including rehab/set up costs) at 50% - 60% of market value as well as charging lucrative financing terms you will achieve an additional source of income. However, the big benefit of bringing in mobile home repos and selling on terms is that you will be able to rent another lot. On the average, your mobile home park will increase by $10,000 - $15,000 for every additional mobile home lot that is occupied. Not only will you have additional revenue (which is almost all profit... as you will have minimal variable costs for each additional lot rented) but your equity in the mobile home park goes up astronomically! I think it is possible that within the next 12 to 24 months the supply of repossessed mobile homes will diminish significantly and then it will be necessary to go back to buying new homes again, so now is the best time to seek out the best deals on the repossessed homes that are available! By Corey Donaldson, co-founder of http://MobileHomeUniversity.com - The leading online source for mobile home and mobile home park investing. About the Author: Corey Donaldson started his real estate investing career in 1993 by selling his jet ski to raise enough money for a down payment on his first deal. Since then, Corey purchased a sizable portfolio of real estate, including apartments, single family homes, self storage facilities, and mobile home parks. He purchased 4 mobile home parks with over 600 total lots and owns 200+ mobile homes. Corey speaks regularly at real estate clubs, national seminars, and universities about mobile home and mobile home park investing. For more information on mobile home and mobile home park investing you can go to http://MobileHomeUniversity.com You can reach Corey at Corey@MobileHomeUniversity.com
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