We Bought A Mobile Home For $37,500

I’m all about low cost housing.  In our county there are two mobile home communities where the mobile home owners also own the land, there is no park to pay lot rent to.  Over the last couple years I have kept an eye out for properties in this neighborhood to come up and one did back in July.  Here’s the story of how and why we bought a mobile home.

When we left Ohio at the end of July on the ride home I identified two properties while looking at Zillow that had just hit the market that we were interested in, a house in our neighborhood across the street from us, and this mobile home.  We scheduled appointments with our realtors for showing.

Why Did I Want A Mobile Home?

When we purchased our 6 unit in 2022 Mrs. C.’s kid’s dad moved into one of the 1 bedroom units. As part of the deal he kept the lawn mowed and cleared up the snow in exchange for a lower rent.  This has worked out well for both of us over the last 3 years.  He is now in a serious relationship and his girlfriend has a dog. A small 1 bedroom apartment is no longer ideal for them.

We also have finished rehabbing all of the other units and have turned them into short term rentals.  If I could turn his current unit into an STR I am confident we would gain about $6,000 per year in income.  With the way that multifamily houses are valued, this is extremely significant.  At a 9% cap rate, increasing the income on this property by this much will increase its value by $66,667.  This is a massive value add opportunity for us.

With a low cost property we could provide a win win situation where he could still have low rent and continue to lawn care and snow removal at the apartment, while also getting more space and we could increase the valuation of the apartment building.  A mobile home on land is the lowest cost of ownership housing in our area outside of living in Benton Harbor. Property taxes in this township are among the lowest in the county, the property has a well and septic tank, and of course it was low cost to purchase.

One advantage this particular mobile home has is that it is at the front of the mobile home subdivision and has frontage on a main road.  This allows the property to feel like it isn’t in the subdivision and also makes it easier to get out of after a heavy snowfall.

Wholesalers:

When we arrived at the mobile home for a showing there was no one there to let us in and there was not lock box.  We found out that the seller was not the owner of the property and was a wholesaler who had got the property under contract and was shopping for an end buyer to sell the contract to and make a profit off of this.  Wholesaling is OK if it is done ethically, and in this situation I do not think it was.  The wholesaler asked us to lie to the property owner and say we are inspecting the property for them.

The original owner never showed up and we rescheduled…and once again they never showed up.  I walked around the outside of the house and decided that we would make an offer without seeing the inside. I will say that I was influenced by another individual.  A man showed up at the same time as us to see the property and wanted to purchase it.  I decided to make a more aggressive offer due to this.

The Offer:

The property was listed for $42,500 and I offered $37,500 for the property.  As always, I stated the property could be deeded “as-is” and we will dispose of anything left behind. It’s been a while since I’ve bought a property without seeing the inside of it, and this is always a risk. I absolutely should have offered much lower given the situation.

Title Drama:

After our offer was accepted, we found out that the wholeseller who we were paying $37,500 to got the property under contract for just $15,000. Not only that, but they only put down $100 of earnest money and locked the property down for a 60 day inspection period.

When it was finally time to close on the house, we found out on the day of closing that the seller did not have clear title.  The seller had been gifted the home by her mother, and the title company found a death certificate for her mother dated prior to the deed transfer date.  Due to this we could not close, and from our contract, the deal was off, as it was required to be closed by that date.

After some discussion we decided that we would still want the property with an unclear title, but not at the same price as we would be taking a big risk.  We contacted the seller directly and then found out that the title company was in error, as we met her mother who was still very much alive. The sellers were still bound by their contract with the wholeseller, who had the option to extend a deal an additional 60 days if there were any title issues.

We ended up going through the purchase process again and it took another 3 weeks for the title to clear.  We had very poor communication from the Wholeseller, who was supposed to be leading this thing.  When it was time to close again, the Wholesaler set the date with us and then did not inform the seller until the night before closing.  When the seller told them they couldn’t and that they needed time to move out, they threatened to sue the seller if they didn’t close the next day.

We ended up closing, and arranged with the sellers to have more time to get their stuff out after closing. We closed on the house at the beginning of October.

The big lesson here is if you go to a Wholesaler or a “We buy houses for cash” company, READ THE FINE PRINT.  understand what you are signing.

I feel I overpaid by maybe $5,000, but the initial sellers really got screwed.  I feel like even in a wholeseller situation they should have got at least $25,000.

Repairs:

The first major issue with the house was getting the junk out.  The sellers had cancelled their trash service and had a dog and a baby, so the excess trash was in the yard and on the porch.  Since the family left on short notice they also scrambled to grab what they wanted to save and everything else was left in a big mess.  For us that was OK.  Our goal was to get the house, we can handle some junk.  We had a 20 yard dumpster delivered and I filled it up on my day off from work.  The next day Mrs. C. and some other family members ripped up the carpet and other flooring and added it to the dumpster.

Cleaning: After the dumpster was filled we scrubbed the walls, scrubbed the cabinets inside and out, and swept the cobwebs from the ceiling.  We spent a couple days on deep cleaning.

Replace rotten floor boards: There were 3 sections of the house where the floorboards were sagging, in the kitchen, the laundry room, and in one of the bedrooms. We cut out the bad sections and patched in new sections of subfloor. We also added some supports to make those areas stronger.

Replaced the stove setup: The original stove was propane and we switched it to electric. I had to install a new breaker and run a line under the trailer. This was not fun.

Replace broken windows: There were two broken windows that needed to be replaced, Thankfully I had some that were the right size stored away. I had bought about a half dozen storm windows from a restore for a few bucks a piece maybe 5 years ago.

Paint: Several walls needed drywall patching and we needed to paint all the rooms. I painted the ceilings in the bedrooms as well.

Flooring: We installed sticky back flooring in the kitchen and bathrooms and had Lowes install carpet in the bedrooms and living room.

Water: The pipes froze during our first big freeze and I had to run a heat trace wire on them and re-insulate the pipes.  Always keep a drip going in the frigid north!

Bathrooms: We replaced both vanity cabinets and sinks. I spent more on this than I intended to. In the master bathroom their was a 4′ vanity and I decided to buy one that Lowes had on clearance that was nicer than the basic model and only around $20 more. I didn’t pay enough attention and bought one that did not come with a top, so I had to spend an extra $160.

Appliances: The previous owners left the fridge and the dryer. They left the stove as well, but we decided to replace it. We had both a spare stove and a spare washer from our other rental activities and moved those over here.

Closet: We built a larger closet by walling off part of the master bedroom.

Pressure Washing: I pressure washed the worst of the siding, cleaning the front and the sides. I did not get to the back. What a difference this made!

Costs:

Remaining Repairs:

Interior Doors: We have a couple interior doors that need replaced and we will get that done shortly.

Skirting: In the spring we need to replace a majority of the skirting. To get through the winter I shoved some insulated boards into place to block the wind.

Back deck: The back deck needs steps added to it.

All in we will likely be around $45,000 total.

Normally I get some good after repair pictures, but our tenant was anxious to move in early and moved in while we were still finishing stuff up, so I don’t have any good finished pictures.

What do you think of this low cost of living option?