Mobile Home Update

March 7, 2010 · 11 comments

We’ve had a bunch of stuff going on with our mobile home investments over the past two months, but I haven’t had much time to write about our progress, issues, and current status…so here goes:

Mobile Home #1

Our very first mobile home purchase took a turn for the worse last month when our buyer (who we were selling to with financing and had been in the home since October) decided to move out, without giving any notice. We didn’t receive a January mortgage payment, and upon investigating, we found the MH had been abandoned and left in pretty rough condition (actually, they bought it in rough condition, so it wasn’t much worse).

We had realized after we originally purchased that home that we probably didn’t want to be taking on mobile homes that required too much work, and therefore decided that we didn’t want spend a lot of time/energy rehabbing this one once the buyers left. So, we bit the bullet and sold the home to a cash buyer at a low price.

We had purchased the home for $2000, put in $150 in rehab and another $125 in transfer costs and taxes. We had received $1400 in down-payment and loan payments from the original buyer, plus another $750 from the cash buyer who ultimately took it off our hands. After all was said and done, we lost $123.47 on this deal…the first time we’ve ever lost money on a deal! But, it was a good learning experience and I’d rather take the $100 loss than have to deal with that run-down home…

Mobile Home #2

We’ve had our buyers in this home since October, and they are fantastic. They pay their loan payment on-time every month (before the 1st even!), and they’ve been a pleasure to work with in all respects. They still have 14 payments left on their mortgage, and the way things are going, I’m pretty confident they’ll get it paid off. They had been talking about paying off the loan with their tax refund this month, but I don’t think that’s going to happen.

We’re into this property for about $1400 after all costs and expenses, and we expect that if these buyers pay off the note on-schedule, we should make about $2500 in profit, for a bit more than 100% return in 18 months.

Mobile Home #3

These buyers have only been in the home for two months, but have made both their payments on schedule and we haven’t had any issues with them. They have 12 more loan payments before their note is paid off and they own the home.

We’re into this property for about $1300 after purchase costs, rehab, paying off back lot-rent, etc. And we expect that if these buyers pay off the note on-schedule, we should make about $2600 in profit, for nearly a 200% return in just over a year. Not too shabby…

Mobile Home #4

We purchased this home for $1500, put in about $420 in rehab and tax payments, and then turned around and sold it to a cash buyer for $3500. In the week that we held that property, we made $1579.29 in profit on a $1500 purchase, for greater than 100% return in one week.

Mobile Home #5

We purchased this mobile home a few weeks ago for $500 and put in $560 in back lot-rent and rehab costs. We quickly found a buyer who needed financing, and sold it for $3500 ($500 down-payment and $3000 mortgage to be paid over 13 months).

Projected profit on this one (assuming the buyers pay off the mortgage on-schedule) is $2650, for a 250% return in just over a year.

So, overall, I think we’re doing pretty well with the mobile homes. MH #1 was clearly bad purchase (in retrospect), and who knows what adventures we’ll have with the remaining three buyers who we are financing the purchases for; but from a purely financial standpoint, we’ve been able to buy and sell these homes for substantial profit margins, and (so far), the work required to purchase, rehab and resell the homes has been pretty minimal, especially compared to typical single family homes.

11 responses to “Mobile Home Update”

  1. Kyle TX says:


    Found your website via a BiggerPockets post. Great site. Tons of ‘real’ RE posts.

    While I’ve been investing in SFH for years and most recently MF, I’ve choosen MH and MHPs as my ‘pet-project’ for 2010 and am trying to learn the differences from SFH and MF.

    2 quick questions:
    > Other than your direct bank REO and Craiglist purchases, where are you and your partner searching/finding doable MH deals?
    > Are you open to MHPs in 2010? If so, what is your mindset going in? (Any specifics would be great.)

    Keep up the good work. Really great stuff.

    Kyle in Texas.

  2. Great to hear about your stories in the mobile home world! Yes, sometimes there will be “losers” but it’s good to hear there have been more “winners” with your mobile home adventures. Good stuff!

  3. J Scott says:

    Hey Kyle –

    1. Currently, those are the two big avenues we’re using to find MH deals (Craigslist and REOs). We do drive through the mobile home parks where we purchase homes and will often call For Sale signs, so that’s another avenue that we’re pursuing. Lastly, we let the park managers know that we buy homes, and offer them a bonus if they refer a sale to us.

    2. Definitely open to MHPs in the near future. In fact, I think that business is much better than just buying individual homes. Unfortunately, I have a lot of research to do before I’m comfortable buying a MHP…but I’ve started!

  4. Tim Fisher says:

    Hey J not to clog up your blog with posts unrelated to the topic at hand, but was just wondering if you received my latest email with some questions I had. Getting closer to moving so hopefully w/in the next 6 months I’ll be ready to start laying the foundation for my business. I appreciate all your insights along the way, you’re really helping me to conceptualize this whole thing.

  5. J Scott says:

    Hey Tim –

    Just found your email in my junk-mail folder… 🙂

    I’ll get back to you in the next little while…

  6. Tim Fisher says:

    Thanks J I appreciate it!

    Guess I’ll have to have a word with your mailman then…. 😛

  7. Karen says:

    Any updates on the mobile home front? I’m seriously considering going this route in order to accumulate more cash to eventually purchase single family houses. Do you know how the taxes work though? Is the income earned through selling via owner financing taxed as capital gains (short or long?), ordinary income, or what?

  8. Karen says:

    Never mind. I just found out that I would need a dealer license to do this in Florida which involves a $25,000 bond among other things. Doesn’t seem to be worth it. But it’s good because now I can really focus on doing what I really want to do which is rehab flipping. And I’ll have my license soon so I can put in oodles of offers every week until I get a property, instead of the 2-3 my agent is putting in now, which I appreciate but it’s just not getting the job done.

  9. Philip Bourdon says:

    I love the Lonnie quote, “Not too shabby…
    ” However, are you holding the notes? Are you using a loan originator because of the SAFE Act?

  10. J Scott says:

    Hey Philip,

    Check out my Final Analysis post for the Mobile Homes:

    We sold off our last two notes about a year ago…

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