Does This Make Sense?
Hello,
I have gathered some information about the mobile home subdivision close to me. The subdivision is not a MHP; the lots are 1-5 ac. About 90% of the homes are DWMH, but there are some site built there. There are 5-7 homes for sale now ranging from 135-155K.
I had a realtor pull comps a few months ago (5), and most houses were selling at ~110-120K with 90-120 days on market.
The subdivision developer is offering the 1 ac lots for 41K, 5K down at 11% interest.
They install all of the utilities, septic, ect. Put a base down for the house, but charge 5K extra for FHA foundation. They just opened up a new section with I don’t know how many lots available. 80? 100?? I’m thinking that is would be a good opportunity for a strong cash discount. Big supply in a down market = motivated seller.
The REPO MH supply is just booming here. They simply have too many foreclosed homes to deal with. I did the math on a list of homes looking at the wholesale prices listed and the amount of discount the rep told me they typically give (30-45%) and a nice 4/2 or 5/2 2000 or newer is in the 20-30K range, or $10-15 sq ft. They are motivated sellers.
The highest price scenario looks like this:
30K DWMH
41K Lot and improvements cash, negotiate no cost for FHA foundation.
10K for any needed repairs and as a profit cushion.
5K to move and set up.
Total 86K about 80% low end FMV; about 70% FMV at the high end.
Lowest price scenario:
20K DWMH
35K lot? Is this realistic? 15% cash discount. Could it be more?
10K repairs and cushion.
5k move and set up.
Total 70K less than 65% FMV on the low end; and 58% FMV on the high end.
So the profit ranges from 24K to 50K. Average 37K.
I also fudged a bit with the 10K pad for repairs. Profit could be higher.
Motivated land developers. Motivated REPO banks. The only problem is finding qualified buyers and getting it sold quickly! I’m sure there are plenty of buyers out there, but I have never dealt with this before, so I don’t know how to get good qualified buyers lined up. I think that the days on market is a good indicator that people do want to live in this area.
Please give me your input, criticisms and everything else.
This is in Texas.
"The REPO MH supply is just booming here. They simply have too many foreclosed homes to deal with."
That comment, and the fact that you say buyers are hard to find, would make me a little more than hesitant.
Give me a shout or PM or something. Lets communicate. There are some really nice doublewide homes and site built homes built today that are better than apt living. Lots seem a bit high but that may be the going rate for developed lots these days. A bit worried about days on market at $110,000 to $120,000.
Good LUCK and HAPPY HOLIDAYS
Contact me soon
Ted Jr
Quote:
On 2003-12-13 22:52, makingaliving wrote:
"The REPO MH supply is just booming here. They simply have too many foreclosed homes to deal with."
Conseco/Greentree has gave us a large repo supply from their wise lending practices a few years ago.
Green Tree will package a few homes and sell them to you at an even greater discount if you can get the cash together. More Profit!!!
To sell them I would go to all MH dealers in the area and give your listings to them personally. Give the sales person 1-2K for bringing you a customer who will cash you out. He should also have access to some strong land/home finance sources. Put out some bandit signs. Try hitting some high dollar apartments with flyers.
Or why don't you look for the buyer before you even buy that property. In another word, if thay are willing to wait you can also ask for the long escrow subject to ________ and try to buid in a clousule that will let you out of the deal at any time, lets say for non aroved mortgage, so you can get out if you don't find a seller in tha mean time.
omega1
Just an update to this post. I called RE agent Friday and he told me the comps were lower than I thought they were. 80-95 was the ballpark, which makes this a dud of a deal. The funny thing is, I was a looking buyer 5 or 6 months ago and the agent that I had at the time was telling me that 115-110 was a good value. Anyway I learned 2 things on this non-deal. When getting comps, talk to two agents. Due diligence is very important.
Q
a lesson learned well indeed.
You will find in this market (RE). You can never get too much advice or information. It's what you do with it after you get it that matters.