In April of 2005, my Mom (who, like me, is also a real estate agent) was looking through our local “Thrifty Nickel” weekly classified ads newspaper. She saw a very interesting ad and brought it to my attention. The seller who placed the ad offered to sell six mobile homes, all on their own lots. The mobile homes were real property, not mobile homes located on rented lots. They were all being offered with seller financing.
The seller lived out of town and when we called him, he told us the mobile homes had been empty for a couple of years. He said to drive by them and then call him back if we were still interested.
Of course we, (my Mom, Dad and I), went to look at them immediately. One was occupied by a transient squatter, so we couldn’t get in to that one. Four were literally falling apart from rotten roofs and all the rain we had been getting. The last mobile home was in good enough condition to consider. We called the owner and asked him to meet us, so we could get in to look at it.
Our initial inspection revealed outdated appliances (think yellow and avocado colors). There was rotting under the kitchen sink, and an ugly master bath shower that had been painted in order to make it “look better”. There were different types of carpeting in each of the rooms, and there were water leaks in the roof in various places.
Of course if you have ever worked on a fixer-upper you know that what you see on the surface is not the only work that needs to be done and we took that into account.
We went ahead and bought the mobile from the owner for his asking price of $65,000 by putting $5,000 down and creating seller financing for the balance at 8% interest for 30 years with no balloon payments. I think our payment was about $500/month.
We put about $10,000 and a ton of sweat equity into the property over the next 90 days.
As we were working on the mobile home, we found lots of extra things that needed to be fixed. For example, we took out the old shower stall in the master bath so that we could put tile in. After it was out, we found that the flooring under the shower and under the hot water heater, located directly behind the shower, were rotted through. The rotten flooring had to be replaced, and then the hot water heater had to be replaced. Those were just one of several unanticipated costs and repairs.
Other items of repair or upgrading included:
•Replacing all of the carpeting.
•In the kitchen: replacing the kitchen sink, repairing the rotten floor, painting the walls and cabinets, adding a dishwasher, a disposal, and then replacing the stove and the refrigerator.
•Repairing the roof and then painting the ceiling where the water staining had occurred.
•In the master bathroom we replaced the vanity, the mirror, and the lights. We also tiled the shower and tiled the floor. This work is what really sold the home…it looked awesome!
•Outside we cleaned up the knee high weeds, removed dead bushes and trees, trimmed the over-grown shrubs and then planted lots of flowers.
•The home also included a sunroom which had rotten walls, and ceiling from the leaking roof. The sunroom was also heavily infested with termites. This room had to be almost totally rebuilt. Termite eradication was $500.
•We also hauled away seven large trailer loads of trash and remodeling debris.
•Nearly all of repair and remodeling work was done by my dad. (Way to go dad!)
When finished, we ended up putting the mobile home up for sale at $130,000. This was three months after we bought it.
We had it for sale for about three weeks and then withdrew it because we started thinking about using it as a rental. It would have rented for about $800/month giving us about $300/month positive cash flow, before expenses.
The day after we took the home off the market, we received an offer from a buyer for $120,000, cash, which we accepted.
After the remodeling dust had settled, we made $45,000. This was a tidy profit for 90 days of fix up work. We haven’t been able to find anything like this deal since then, but we keep looking!
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