My wife and I own a 12 unit rental, and have previously owned a 4 unit rental (sold that one off). Many things go into the real estate game. I managed the 4 unit rental for a couple years, and the 12 unit rental for 6 months before passing it off to a property manager.
are you handy? Can you fix stuff yourself or would you have to hire someone? This plays into the age of the property you should consider. Older properties will need more work, which will add up if you're paying other people.
Instead of a trailer, are there any duplexes or 4 plexes available in your area, in your budget? You can get residential financing on up to 4 units, so you can live in 1 and rent the other 3.
Would you have enough cash to budget for repairs, vacancies, and evictions? You would want enough cash on hand to float it for a few months at least. This requirement is looser the more units you have, as the chances of all the units being vacant at once is reasonably low.
How comfortable are you enforcing the law, down to the letter? This is pretty important, as you must treat all tenants exactly the same. Unless you plan on letting everybody skate by paying late, you have to strictly enforce the lease terms and applicable laws. If you have any softness, people will sense it and exploit it. 100% guaranteed.
Why are you thinking of the trailer in the first place? Is it because you can own it with no mortgage? The real estate game is won by prudent and strategic use of leverage. Purchasing a mobile home, which is a depreciating asset as per @Carny's insight, doesn't plan into the strengths of real estate as a wealth protection/generation vehicle.
Most liked posts in thread: Any land lords on here?
Where are you located? That seems really high for a mobile that old. I guess they may go for that in areas with higher home prices but I would think 40k would be close to getting a new single wide.
Anyway, there are a few negatives on mobiles:
1. They suck to work on. They use trailer specific parts (may not be true if they’ve been remodeled) and a lot of contractors don’t work on them or charge more.
2. They need work often. They’re generally made as cheap as possible and don’t hold up.
3. They depreciate.
4. They attract rough tenants. Rough tenants don’t take care of stuff. See point 2.
5. They really suck to work on.
I would count on them being worth half (or less) in 5 years unless you fix things and do a little remodel every time a tenant moves.
If you’re ok with all of that then get someone that really knows what they’re doing to inspect them. Make sure it’s not lipstick on a pig.
One thing to definitely check is the plumbing. If the water lines are gray or black (polybutylene) you’ll have continual problems and should plan on repiping with pex.
If you’re handy and can do some work that will help. If you plan on hiring all the work to be done I would figure in quite a bit for that.
Join 1000s of entrepreneurs who are rewriting life's script and winning financial freedom.
You must be a member to join the conversation.
Join the community fast and easy!REGISTER
Already have an account? Login here.LOG IN