The Multiple Listing Service (MLS) does have a category for manufactured housing. It is typically identified as a home type. It is located on private land as opposed to those found in mobile home parks. However, the MLS is not typically where you would look for deals. Others broker mobile homes, including those in parks, as a specialty. It may be good to network with mobile home brokers. Still, the deals will likely come from working directly with the individual homeowners.
If sign ordinances permit, you may want to place bandit signs in key locations where people going to and from the MHP locations can see them at intersections and areas where the driving speed is reduced. Ads in Craigslist to advertise your interest in buying homes and scanning for homes listed using keywords should also be part of your marketing plan. Don’t forget to incorporate social media like Facebook, Facebook groups, and old-fashioned networking into your plan. Direct mail and flyers to residents in the park are also part of a comprehensive outreach marketing campaign.
Purchase Offers and Exit Strategies
A critical activity in your real estate investing is going to be making offers. If you don’t make offers, you won’t make money! The offers you make have to work for YOU and solve the problem the homeowner has. Sometimes the seller will need cash quickly. In those cases, you may prepare a cash offer. When paying cash, the price is generally lower than when you make an offer based on terms. The seller does not need all cash right away and is willing to spend the time receiving payment to get a higher price. The important thing is that you are consistently making offers. Some will be accepted, many will not – and that’s okay. Keep making offers!
You will need to know what you plan to do with the home before purchasing it to understand how your numbers need to look. This may be determined, in part, by where the home is located. If it is in a park, the park rules may decide which strategy you will apply to make a profit – if you must move it, you will need to include transportation and set-up costs in your numbers. You may want to fix it and sell it. You may want to improve and rent it or provide rent with an option for the renter to purchase at some point in the future (a/k/a lease with option). You may want to get it under contract and assign that contract to another buyer for a fee (a/k/a wholesaling).
Following are examples of how you can determine what your profit might be from a potential deal.
|Sale Price to Your Buyer||$25,000||(This could be to an investor who will rehab)|
|Purchase Price to Your Seller||–||$20,000||(contract sale between you and the seller)|
|Your Assignment Fee||=||$ 5,000||(the amount you earn for selling your right to buy the home at a great price)|
|Check with your legal team/ local laws to ensure your documents reflect the transaction in a manner that complies with local regulations for assignment contracts and any “dealer licensing” needed.|
|Purchase and Sale Transaction:|
|Estimated Resale Value||$50,000|
|Negotiated Purchase Price||–||$25,000|
|Fixed Costs (taxes, etc.)||–||$ 2,500||(est. 5% of sales price)|
|Closing Costs||–||$ 1,500||(est. 3% of sales price)|
|Purchased with Seller Financing and Rented*:|
|Rent Paid to You for the Home||$ 650||(renter responsible for lot rent)|
|Your Payment to Seller||–||$ 200||(per your seller financing agreement)|
|Fixed Costs||–||$ 130||(est 2% of the rent for maint, taxes, mgmt)|
|Net Cash Flow||=||$ 320|
|*Remember that you must not have restrictions against renting where the home will be located, and the occupant will need to be approved by park management, if applicable.|