So you’re a park owner, and you have some vacant mobile homes. You want to get them sold. In that case, you have few decisions in front of you. First, do you want to improve the home? Do you want to do everything needed to get it in tip top shape? If so, you can sell it for full retail value to a tenant, finance the deal, and charge them whatever the lot rent is.
Also, it’s important that you must exercise caution when structuring these. Always ensure that you’re operating in accordance with real estate laws. Often that means you will need to get a dealers license for that state, otherwise you could face stiff penalties.
In 3-7 years, they’ve paid off their trailer, and now they’re a permanent tenant. This best case scenario of course requires significant time and effort. You’ll need to ask yourself if the home is worth how much it would cost to repair. If not, demolition is a viable alternative. This would make way for an all new home, and save you money on pointless renovations.
Should I offer the handyman special?
If you decide on the “handyman special” for your vacant mobile homes, consider the extent of what comes with this choice. There are no hard and fast rules about selling the unit as a “handyman special”. You can get creative here if needed. I often heavily vetted the tenant as my main prerequisite and then made them a deal they couldn’t refuse based on the results of the vetting process.
Let’s say the unit is in poor shape. The repairs could cost you $10,000 to make it code compliant and habitable. The lot rent in your park may be low, say around $250 and after repairing the unit it may just be a wash in profits (or even a loss) so therefore you just spent a lot of time and headache to just break even on that unit. Instead, if you had sold or gifted the unit as is, and had the new (and highly vetted) tenant agree in writing to fully repair and remodel the unit, you should be able to charge full market lot rent or even higher in many cases (especially in a “gifting” situation). You’re essentially moving a lot rent paying tenant in, and giving them a title after the unit has been approved and rent payments have been made on time.
Take plenty of caution here though as these residents are a lot less likely to stick around long term. We’ve even seen someone move in, fix the home up, and resell it all while paying lot rent for it. Sometimes for the better but sometimes for the worse. Make sure you have a solid written agreements that covers these type of issues.
Selling a refurbished mobile home
Let’s say, on the other hand, that you have a $25,000 home that you’ve repaired, making it a suitable living space. From there you can either keep it as a rental, or sell it as an RTO. This is pretty common among park owners. 9 out of 10 times, it’s worth keeping the home and making the repairs. Once the RTO note is paid off, your client receives their title. These are the residents that tend to stick around for years to come.
If you do choose to go with the handyman special for your vacant mobile homes, here are some tips. You can run some test ads noting the condition of the home and the required down payment and rent. You’ll want to be honest about the state it’s in. Nothing beats transparency when establishing a solid reputation as a park owner. After 3-5 varying test ads, you should have a good gauge of which got the highest market response.
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