What You Missed July 2015 General Meeting
by Rob Earhart

Trailer Park Riches

Presented by: Lenny and Anne Cimador

July 7, 2015

“We have found that mobile homes are very profitable if you do it right,” began Lenny. “We will instruct you in what constitutes a mobile home vs. stick built homes and that there is more money in mobile homes.” If you want to sell one you need to get the right one to qualify your buyer for FHA financing.

What is a manufactured home? They are manufactured in a factory to current building codes. HUD homes are mobiles and are different. You can see a HUD label on each section. Manufactured homes are HUD code homes, but mobiles are sometimes called wobbly boxes, or metal marvels.

Why do mobiles cash flow on land? Because you can purchase them cheaper. We always shoot for 5 year payoffs. They have lower mortgage payments. They have lower taxes. Always use the term “Manufactured Homes,” not mobiles. Insurance is cheaper also. The land is where the value is.

Two homes we purchased to flip, one stick built and one manufactured home. We still have the stick built. “When you buy your real estate, you buy your tenants,” proclaimed Lenny. “We normally rent, not flip,” he said. The stick built home takes about 15 years to pay off and the manufactured home 5.5 years.

Why on land instead of a lot? We try to buy them 10 years old or less, and doublewide homes are preferred. If you move an older mobile home from a lot and move a newer home in you do not have to pay new impact fees. If you move it in directly from a manufacturer you can get FHA financing.

We evaluate our portfolio every year and if it’s not performing, we sell it. We found out the cost of moving and setting up a mobile home for up to 50 miles. Singlewides are $4,000, Doublewide $5,500 – 7,000, including plumbing. We use a $15,000 price point to purchase. The county gets you on the septics so you have to be careful. They say it’s now a flood zone and a raised septic will cost around $6,500 to install.

You can move one onto a lot but it will be $30-$40k. If you move a used mobile home onto a lot it cannot be FHA financed, but you can owner finance. If you have the modular set up with license tags and the land is taxed as vacant land, everything is cheaper.

Why not in parks? The park rules prevail, they can charge a high fee to qualify, and they can lien the mobile for lot rent. We lose control. The park owners can delay and not approve your buyers. “The only exception to that is to own the park,” exclaimed Lenny.

We avoid dirt road and limestone roads. The dust covers everything. Power lines are also to be avoided as well as rundown neighborhoods, HOA fees, etc.

Our criterial for buying land: “We want to be within 30 minutes of our office, ½ acre or larger, and make sure it’s zoned for mobiles, especially more than one. County water is preferred, sewer is best, but septic systems are ok.

RentPro Property Management is our company. To qualify a renter we first find out if they can pay the rent. I also ask if they have pets and what type. We sold a property on option with $5,000 down and then credited $100 from their rent for their purchase. You can make more money renting weekly but it’s a lot more hassle. We set up an automatic payment program so the rents are easily collected. We use Bank of America deposit cards and if they pay by the 25th they get $100 discount. They put cash or a money order in. We use Bank of America, but Wells Fargo does it also.

How do we find our homes? Normally on the MLS, but you can walk neighborhoods, use bird dogs, flyers, newspapers, bandit signs, find mortgages in default, and foreclosures. We always buy 2002 or newer. That way buyers can go to the bank and get a mortgage. Don’t get any older than 1976 to be able to qualify for FHA financing.

As far as expenses, you are going to spend 40% of what you take in, so take that into consideration when buying a property.

For the homes, we prefer 3 bedroom 2 bath homes, just like a stick-built. Is it a keeper or rental? Homes of 1,400 sq. ft. and larger is better, but we have done singlewides with a lot of land. The floorplans are important, but most manufactured homes have efficient plans.

We avoid homes with floor vents, too many repairs, funky floor plans, ugly interiors, mold, dark interiors, no title, but HUD does not give a title for homes on land, just a deed.

We like to get our initial investment back in 4-5 years. We determine market rents, determine the value of the land, and find out the taxes. We always get comparable sales, which you can check on the property appraiser site.

We always insure for liability, but if it’s free and clear we seldom insure for fire and wind because the costs are more than the replacement.

Lennie and Anne then gave a few examples of properties they purchased and paid off in 4-5 years.

Who are the target renters? Apartment renters, mobile home park renters, first time renters, HUD tenants, and fallouts from foreclosures.

How to screen tenants? The same rules apply as stick built, but just use common sense. Using an application, visiting their current home, and checking employment history is important. We do not run credit checks unless we need tenant to buy with institutional financing. We do check court records, eviction, criminal, and pay stubs for the last month. You are in a people business, so learn to deal with people in a positive manner.

Exit strategy: We get rid of poor performers, will even take a loss or lateral trade, and analyze at least yearly.

Lenny then talked about continued education. “You need to learn from everyone and never stop taking seminars and classes,” exclaimed Lenny. “Invest in your education. Attend seminars on note papers, on buying homes, on cash flow, etc.”

Don’t be afraid, go out on a limb; that’s where the fruit is. If you ever have any questions, please give us a call.


Search The Suncoast Real Estate Investors' Site

Trying to find a particular vendor? Use our search facility.

copyright 2005 - present date

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign Up For Email Notifications

Remember to Bookmark or Add SREIA.com to
Your Favorites

Come back and
visit us often.