Made An Offer On Trailer and 1 AC Today Plus Another Prop

I've been kinda-sorta looking for some income property for a while now. Today, a 3 BR, 2 BA mobile home (1990) on 1 acre, plus a 2 car detached garage (no power to garage) came on the local market for $35K. It's a repo, but in pretty darn good shape. It will need a new gas line from the meter to the house (estimate ~$1,800), a little bit of minor other work (new porch support, new heat/ac unit, real good cleaning, paint inside, fridge, dishwasher, stretch carpet), but doesn't have any holes in wall, good foundation, nice fences all around. It'll need a new a/c for sure, possibly a new heat unit, also.

My offer was $35.5K. Asking price was $35K. I offered $500 more to show we're serious and to avoid getting outbid on initial offer. Rent for such a property in this area is around $700-900/mo. Sweetie is on board for this. Realty company will do prop mgmt for 10% of rent.

I'll possibly take a loan from a 401(k) that ain't doing well (hasn't lost money, just ain't making money) to pay for it outright. The 401(k) is from my last employer and I didn't roll it over. I have enough banked locally to take care of any repairs or appliances. I'm a few months from 59 1/2 to take out without penalty, but my income would make taxes outrageous.

There is another property, 5 ac undeveloped, that we're also considering. We've got the realtor looking into flood plain, deed restrictions, etc. They're asking $28K for this property. It's on the edge of a nice subdivision, sewer running thru middle, utilities at edge of property. So, we're still thinking about this property, but Sweetie has reservations about it. Nothing she can put her finger on right now, but something just doesn't seem right about it. It was on the market for $35K for 2 months, price just lowered. We'd use another loan from same 401(k) for this too.

There is a possiblity that our little town could, in the next 5 years, experience significant growth due to incoming unique business. (Can you say thank you, Yucca Mountain for failing?? LOL) Again, this right now is just a possibility.

Anyone got any thoughts or helpful hints on these props???

Thanks!

Kajun

P.S.
We've got bullets, beans and PMs taken care of, no debt whatsoever.
<!-- / message --><!-- sig -->__________________

 

Thanks for the response!

Sweetie and I decided to pass on the bare land. She still has the squigs about it and we're gonna go with her gut feeling.

We haven't heard anything on the trailer and acre yet (not surprising. They said they'd respond to offer within 24-48 hours).

I've got funding arranged so as to have the $$ within 3 days of our offer being accepted. We plan on closing late December, so no problem.

I looked at financing as a mortage....11% APR. Not gonna go there. I checked our local bank for a HELOC.....7%, 3 year payback. Another no go. Checked with 401(k) and it's locked up cuz I'm no longer working for the company. I need to move it out to access it, either roll it over into an IRA or send it to current company's 401(k). Drat! But I've got another account that I can tap, not a loan, MY money, so not a biggie.

I figured a little over 4 years for getting initial investment of prop back at $700/mo rent (low end). I'll prolly have to put in another $5-7K into getting it totally ready, so that's another 10 months, so 5 years in, I'll have my investment back and start earning $$. Taxes are only $208/yr, so no biggie there. Insurance will run me ~$500/yr. So, add in another year for those and 6 years into the thing, I'll have all money invested back plus trailer and 1 acre. Hmmmm, maybe this ain't such a good deal after all. Oh, wait! I'll have land and residence free and clear from day 1, so no $$ to recoup!! WOOHOO LOL

Guess we'll have to wait and see if offer is accepted.

Thanks, ya'll.

Kajun
<!-- / message --><!-- sig -->________

 

A friend tried this a few years ago...I hope you have better luck then he did. To make a long story short people would move in, pay the first month's rent then squat (one even sticking him with utility bills) for 6 month till he could get them evicted. after the 3rd cycle of this the trailer was trashed. He collected a grand total of $2500 rent he has the lot for sale and is HOPING to break even, less hes time.

It seems that (here at least) there about 20 families who live like this...meaning hopping from rental trailer to rental trailer and end up never paying hardly any rent. A few have judgments against them put guess what? You can't get blood from a turnip.

Just a warning...i think you could make money if you could procure non deadbeat tennets.

 

We got word yesterday that there were 7 other offers and that the owner was asking for "best and final bids." I told the realty gal I was dealing with that she already had our "best and final." Let the others get into a bidding war.

Almost feel like we've dodged a bullet here.

Kajun

 

I found out yesterday that the trailer and 1 ac went for $39,500. Kinda high, don't ya think???

Kajun