Does it Look Like a Deal?: 2/2 Mobile Home on a Lot

Since I receive a lot of requests for more case studies, I thought I’d make another post for “Does It Look a Deal?”

(Note: While the “Deal or No Deal” case study series focuses on the mechanics of my thought process of evaluating mobile homes from beginning to end, this new case study series, “Does it Look Like a Deal,” will focus more on a quick outside evaluation of mobile homes – I use this evaluation to prioritize the leads I pursue.)

From the very moment I pulled up to this home, I knew this particular home was definitely not something I’d be interested in. Why?

Looking at it from the outside, I could already spot a few things wrong with it – the one thing that stuck out was the ugly addition on the left side. Sure, some homeowners add an addition or two to their mobile homes – it’s something that works for them. But, in my opinion the typical buyer with a homeowner mentality does not want to see an ugly addition especially on their dream home.

(Note: For the most part, I’m usually only interested in homes that blend in well with the other homes in the neighborhood – this includes both the inside and the outside. Anything that involves more than cosmetic work (such as paint and/or carpet) and has major issues (i.e. odd floor plans, extra rooms, additions, etc.) I do pass on).

The other thing I did not like about this home was that it did not have central heat and air conditioning. If you look at the following picture of the side of the home (yes, it’s purple), you’ll notice the window unit sticking out.

(Note: As a side note, many times when you do a drive by of a home and see a window unit or two sticking out this is a good indicator that the home may not have central heat and/or air conditioning. Though, there are times I have found some homeowners to use window units who do have central heat and/or air conditioning to save on energy costs. When driving by, it’s best to see if you can spot an a/c condenser outside which is a key sign).

Regarding homes using window units and not having central heat and air conditioning systems, I’m not interested in them as the typical buyers I work with looking for homes want central heat and air conditioning. Plus, putting in a brand new unit is not very cost effective for the most part.

(Note: This is why it’s so important to know your market – I cannot stress this enough. Time and time again, folks have contacted me who have already bought a home but are having a hard time marketing it. It’s crucial that you know your target audience. Otherwise, you will have a difficult time on the selling end).

Another factor that I did not like about the home was that it was a 2/2. For the most part, the folks I work with are looking for at least a 3/2. So again, this does not fall within my parameters.

With that being said, I chose to check out this home anyways. Why?

For me, the value was not in the home – it was in the lot itself. The owner (who was an investor himself) called me up to tell me he was selling the home with the lot. And, for me – this was a plus as this is the next stepping stone.

(Note: For those interested, you’ll find in this book examples of negotiating and buying the mobile home with the lot).

Since I already knew the market and had buyers looking exactly in this neighborhood, I decided to check out this opportunity. From the outside, I already knew I wasn’t interested in the home itself – only the lot. If we could negotiate a deal, my plan was to call my list of fellow investors looking to move homes on their land and/or parks to move the home off the lot. Then, I could get a home onto the lot (as all of the utilities were in place) that would meet my own criteria.

(Note: This is why it’s so important to have an exit strategy before you go into a deal. I talk more about this in my new book).

In any case, I meet up with the seller and check out the home as well as the lot. Going through the home on the inside, I could spot even more problems. First off, the floor plan was very odd with the new addition. Plus, since this was a rental home – I could tell the owner did not take care of it. There were many cosmetic issues as well as possible water damage. Here are some pics:

Living Room and Kitchen Area
(Note: Flooring does not match and color scheme issues).

Ceiling
(Note: Possible water damage and roof issues).

Bedroom and Bathroom
(Note: Outdated style and color scheme issues).

As I walked through the home with the seller, I found out many things about the situation that signaled to me it probably wasn’t a good fit. For starters, the seller told me the reason both the home and the lot were being sold was that an eviction had recently took place.

By asking more questions, I found out the rent being charged was on the high side especially since the seller told me there was no work recently done on the home. Now, this raised a big flag as the words “slumlord” (aka an investor who does nothing to provide clean, safe and reliable housing but only serves to collect money from tenants) rang through my ears.

After asking even more questions, I also found out this seller (investor) had only bought the home and the lot from the original owner 6 months ago. And, get this – no work was really done to the place to get it in rentable condition. The seller (investor) had thought this was a good opportunity only to find out this was not what was expected and this seller (investor) just wanted to get out of the situation.

(Note: Be careful of “investor” type sellers who appear to be offloading their problems to you. In my opinion, you don’t want to be taking over someone else’s problems unless there is benefit to both parties. And, let me warn you – sometimes there is more involved than meets the eye).

However, the seller (investor) still basically wanted to sell for retail price for the home and the lot – all in cash. Seriously?

Upon hearing this, I politely told the seller that I could not do that and it would be best to talk again when there was more room for negotiation to make it a win/win situation for everyone. I also told the seller my interest in the lot only (not the home) and my intention to have the home removed from the lot completely. The seller (investor) told me they would need more time to see if there were any buyers who could meet their needs but if things changed – I would be contacted. So, we left it at that.

From my conversation with the seller and the condition of the home, I had a weird feeling about the whole situation – I just did not feel that I could trust the seller. Even when we were going through the home and the lot, I found the seller responding to my questions with very vague answers – not being specific. So, I already knew this may not be a person that I could trust and do business with.

(Note: Learning from personal experience, I don’t do business with people I can’t trust no matter how good the deal may be. In my opinion, if I can’t trust the person there may be issues with the deal down the road and/or things that may not have been disclosed which can lead to bigger headaches. To me, I’d rather walk away from the situation and find another deal with someone I can trust. Working with people I can’t trust is just not worth my time as my time is valuable – time is money).

In any case, there’s a lesson to be learned with every opportunity that comes along. And, yes – sometimes not every opportunity will be a good deal and/or fit. For me, this was not the opportunity I was looking for – it just wasn’t in the cards. Though, the important thing is the experience of exploring the opportunity and gaining the knowledge by taking action which is priceless.

I hope this has helped to show you the process I use of evaluating and prioritizing opportunities I pursue.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!