Is $80,000 too much?
 

Talked to a guy today who said the trailer house court is for sell that's across the road in front of my house. He said there was 6 rented trailer homes and comes with 8 acres, all for $80,000. He said the owners are getting a divorce, reason why they are selling out. I haven't seen a for sell sign yet!

Now I've set here many times and wondered why I didn't think of putting in the little trailer park. There's 6 trailer homes and the guy rents them out for $350 per month each. That's $2100. per month/$25,000 per year income. The owner is a real strict landlord and expects his tennants to be clean. No drugs, no parties, and keep a clean housekeeping. His trailers stay rented all the time. If someone moves out, it's just a matter of a few days and it's filled with new tennants again.

Sounds like a good investment to me! What do you all think?

Depends on the condition of the trailers, and taxes on the property. Are you handy with tools or is there someone who is around? can you afford to keep it up if something happens and you lose half your tenants. Other than that it sounds like you could make back your investment in ten years and that would make it a good deal. I would also find out cost of insuring it. Not just insuring the value but also liability if someone should get hurt, they could blame you and take it all away.

What Annabella said. Not sure where you are RH, but I'm in Tulsa and looked into renting a trailer, and the cheapest ones around here start at $500 for decent three-bedroom trailers. You might even be able to get more than the $350 he's been getting.

Just depends on the above variables and whether you really want the responsibility, but other than that it sounds good to me and an excellent price if there aren't any hidden problems that we don't know about. In fact, it sounds pretty low, unless you're in a really small town or bad part of town or something.

All good advice so far. Small courts around here have problems with their sewage systems. Not so much whether they work, but whether they are up to the zoning code. That caused a small park nearby to quit renting about half of their spaces. They didn't own the trailers. Check with the county board of health.

I think the guy has been "lucky" so far to not have probs with his tennants. The first time you rent to someone who doesn't give two hoots about partying, cleaning up after themselves, ripping it up, cause it's not his property...you'd kick yourself for ever getting into it in the first place. JMO...sounds good on paper, but you'd be having to fix all the electrical and plumbing problems at their beck and call.

Who pays the utilities? Usually a biz is for sale for the am't it makes in a year.

Sounds like it "could" be a pretty good deal. What is the land worth on it's own?

Well he has had a few problem tennants before. I've seen him kick the tennants out just after the first weekend they lived their for partying and roughing up the place. Plus, been a few times I've called him up to put and end to a problem or two I've had with his tennants. Such as tresspassing without permission. We have a family cemetary and a few of them try to use it as a party ground and lab to cook their stuff. He knows he is gonna have me do deal with if they cross the line with me. So he's been good to take care of the problem. I worry about the next owner.

Yes, I thought 80,000 was a bit low. We are in a very small community and most everyone has to drive at least 25 miles to employment. 60 miles for better employment. So rent is much cheaper out here then in town somewhere. Maybe the guy meant $180,000.

Either one, I don't have the money for anyway. Unless I win the million dollar lottery tomorrow. :dance:

I the $180,000 would be more inline with the property and its return. Most rental property will be priced at 100 times the monthly income or more.

If you are willing to borrow the money, a bank should lend it to you pretty easily, given the cash flow of the property. (Assuming you have good credit, ect.)

1. You need to look at least 3 years profit and loss statements to find the net operating income (NOI).
2. Look closely at the condition of each trailer.
3. Find out what raw land value is.
4. Discount the present value of the income stream for the remaining life of the trailers and/or infrastructure.
5. Add the present value of the future NOI to the present value of the reversion (future land value at the end of your holding period).
6. Be sure to use a discount rate equal to the yield of your investment requirements.

Or hire an appraiser to do that for you. Remember, gross income does not equal net income. Taxes, insurance, maintenance, repairs, and unforeseen expenses could dwindle that income down to almost nothing.

I think everyone gave good advice. My experience with rental properties has been that maintenance and vacancies can really eat up the income. Check the condition of the trailers closely. Decide if you feel comfortable doing all of the dirty work yourself - painting, cleaning out trailers, lawn work - not to mention handling issues like late rent or evicting someone. We evicted someone out of rental unit once, and the unit was trashed. Cockroaches everywhere, the toilet was overflowing, there were holes in the walls, broken windows, the carpet was stained and ripped, and they left all of their junk in big piles for us to clean up. It was a very unpleasant and expensive experience.

I saw some advice somewhere (on the monolithic dome home site, I think) to rent inexpensive places on a weekly basis, rather than with a lease or by the month. That way if you need to evict someone, all you have to do is call the police. You don't have to worry about all the legal rigamarole to get rid of a bad tenant.

If you have good tenants, and keep the price low (high enough to pay all expenses and make you a profit, but lower than other rentals in the area) you probably won't have a lot of turnover. Do what you can to keep the good tenants, and the headaches will be minimized, IMO. (Of course, there will still be some -- there are headaches in any business.)

Kathleen

I've been a landlord before and I can't think of a scenario that could entice me to do it again. It's always a headache of some sort. Always some sort of drama going on with a tenant. Something is always broken. Someone is always tearing something up and then complaining about it being broken. I've only had a few trouble free tenants.

You need to take into consideration the rapid depreciation of rental mobilehomes. If rented I suspect it would be difficult to get ten years out of them before maintenance became a REAL issue.

For replacements you might look for late model repos. However, I suspect 16' x 80' is the standard today, while the lots may only be sided for 10', 12' or 14'.

Locally we had a weekly rental place which had small cabins/cottages. Wasn't in one, but they appeared to be little more than efficiencies. They tore them all down and went with a standard small mobile. It something happens to it, it can be towed off and replaced with another similar one fairly quickly.

Perhaps some mobilehome company makes them for larger rental units with sturdier construction material.

As a related aspect, I'm in the process of purchasing acreage across the ridge to add to the farm. Two mobiles on it. One is torchbait. Other is a 1993 Cavalier, 3 B-R. Locals raided a meth lab in it a couple of years ago and it was largely abandoned. During that period someone went in and ripped out all of the electrical wiring they could. Simply kicked in the receptacles and ripped wiring up to ceiling through wall panels, then cut off wire. Also stole wiring from inside fuse box to weather head at top of ourside pole. They did several thousand dollars of damage and might have gotten $20 for the wire after the coating was removed. A tenant being evicted might do similar damage out of spite.

I certainly agree with the current landlord's rental philosophy. Read they the Riot Act when they rent and then strictly enforce it. Waverly Housing Authority controls a number of state/federal subsidized units. They also look relatively nice as they don't allow any 'visual trash' factor. No putting recliners out on the front porch or such and, from what I understand, tenants will receive a legal notice to keep yard clean, even of toys left out for a couple of days.

On rent payments, consider every two weeks rather than monthly. There are 13 two-week periods during the year. I suspect you are more likely for them to make payments every two weeks rather than monthly also.

Consider a 'rent-to-own' option. If they make payments on time for a certain numbers of years you will transfer mobilehome title with their only paying lot rental (for utilities and such). Makes an aging mobile their responsibility. However, when they find out the cost to move it elsewhere (likely up to $2K) they may simply abandon it - making it your responsibility again to get title back and then dealing with it.

I know someone locally who has a similar 'trailer court'. I suspect he would be willing to talk to you about the ins and outs of such an adventure.

Hey rh, if you win the million dollar lottery, you won't need the trailers! :p

I don't think you could GIVE them to me. After having rentals I don't think I will do it again. Meth labs, tenants that refuse to move out and several trips to the courthouse and having to have to police there while they moved out, breaking things right before they leave and the only thing you can do is get a judgement against them for money they will never pay... and this was a house... no way.

But some people are able to make money. Good luck! It just isn't something I would like to do again.

I do know someone that had a trailer and when they moved out they plugged the drains and turned on all the water. Total loss, the neighbors called the polilce after their backyard had standing water in it. Worst part is they got away with it.

Wanna bet? I'll buy'm all up and stick a d@mn&d match to em! I've hated those things ever since they went in. I use to live here in my little house all alone with no neighbors other than my "dear ole aunt" who lives next door to me.

I use to raise bronzeback turkeys till all those trailers went in across the road from me. The turkeys would wonder everywhere within a 1/4 mile from me. The tom turkeys were big and strong. Wasn't mean unless you put yourself in between them and their hens. Then you was in big trouble unless you got out of the way fast enough. With that in mind I got scared some little kid was gonna get roughed up by one of my Tom's. Figured I would be seeing a law suit on my hands so I decided to get rid of them.

Also I haven't been able to keep a good hunting dog around here anymore. I use to also keep beagles and coondogs and let them run loose all the time. I dream of the day I will win the lottery and buy everyone out around me so I can have my peice back.

What Steve said. AND ..... hire a property manager to deal with the tenants. It is well worth it.

Ken, are you sure about this? 13 two-week periods = 26 weeks or 6 months around here. Maybe those are TN years <G>.

Mike

You are correct. 26 two-week periods.

For the same $80K one might be able to build rent-by-the-month storage lockers. I've heard they are very low maintence and not as much hassle as living rental units. Since you aren't evicting someone from their living premises the eviction procedure is a bit easier. Something like you have to send a certified notice to their last known address and then wait a certain number of days before contents become your property.

One large one in Dickson justs put on a different lock and then twice a year holds a contents auction. Usually pull out the nicer items and then whatever is left at one price. Apparently few of the latter actually completely clean one out, just sorting through the residue and then leaving everything else. My observation is if there is anything particularly of value in it the folks would have paid back rent and then terminated lease.