Buying Modular Homes

The biggest mistake you can make when it comes to real estate investing is not having a plan. The rehabber I met in Jacksonville has a very good plan and he sticks to it on every transaction. Your goal is to sell your house for a profit. You can do the best renovation job ever seen but if you don’t sell the home for a maximized profit, you wasted your time.

The first thing he does is understand what the other real estate is like in the area of Jacksonville, Fl he is buying the home. You have to renovate the house in a manner consistent with the other homes in the area that are selling to maximize your profit. One good way to do this is to visit homes that are for sale in an area and ask a real estate agent for a list of recently sold homes. Again this research must be done in a small geographic area, he picks one small section of Jacksonville, sometimes a single neighborhood.

What makes homes sell in Jacksonville can vary greatly from area to area, so its important to make sure you are looking at the closest most similar homes that will attract the same types of buyers as your homes.

All too often we make the mistake of renovating a home the way we would want it, when it most cases we are not a potential buyer for the home. Take a lesson from my friend in Jacksonville and make sure you understand the potential buyer for your the home you are working on and tailor your renovation/rehab plans accordingly.

One of the methods I used with my modular homes in Lakeland that I plan on using in Jacksonville as well is the Lease with Option To Buy. I have found this is the best way to sell homes and help first time home buyers qualify.

The great thing about a lease option is you can find someone who needs 6 months to a year to get ready to buy and work with them to achieve the goal. Its important to team up with a Lender who will help analyze your borrowers credit and put them on a plan to qualify. There is a lender in Jacksonville who specializes in offering FHA Loans to people on lease options, they generate a nice report for the buyer giving them a plan. In most cases they can convert leases to purchases in even less than 6 months. They are a direct lender so they don’t have to broker the deals out which is nice, you get the right answer up front. Their website is www.myRPFunding.com, talk to Lee Utley in Jacksonville. There is also a page about them on my blog.

Anyway I am a little off topic, the key to a lease option is that you can let someone move into the home they are ultimately going to own and live their while they fix any issues that keep them from buying. Its important to get a down payment on the lease option so the buy has some ’skin’ in the game. If they walk away from the deal or don’t do what the lender told them to to qualify they have to lose something. I usually get around $2,000 which is then credited when they purchase the home.

Make sure you set the rent a little higher than the mortgage payment would be, you need the buyer to be motivated to convert to ownership not penalized. This again is where its important to talk to the lender up front to get a payment estimate and base the rent on it. You want the buyer to know they will start SAVING money monthly when they convert from the lease option to the mortgage. The rent you can collect will depend on what part of Jacksonville the home is in, but I have always found you can get a higher monthly rent on a lease option than a normal rental.

When it comes time for down payment I use a down payment assistance company to make up the difference between the $2,000 and the down payment they need. This allows all of my borrower to convert to ownership with no additional cash out of pocket. This is big too, you need to make sure the lender has this program available, I won’t work with any that don’t. These down payment assistance programs are readily available in Jacksonville.

Stay in touch with your buyer/tenant monthly and make sure they are sticking to the plan. You get a rent check from them on the first and thats a good time to make sure they are paying all of their other bills and doing the things the lender wants them to do. I have had buyers in the past that I met with every month on the first to get the rent and to make sure they mailed out all of their other bills. This kind of hand holding can really pay off in the end. The more you stay in contact and keep them on track and motivated about converting from leasing to owning, the better chance you have of completing the sale.

Keep Good Records! Make copies of all of the rent checks you receive. When you can prove to the lender with canceled checks that all rent payments have been made on time it is a lot more solid than just completing a Verification Of Rent form.

Now is a great time for First Time Home Buyers to take advantage of the slow real estate market. There are currently opportunities in Jacksonville to purchase homes at below market value and receive down payment assistance and closing costs assistance.

If you are currently renting a home in Jacksonville Florida you should consider taking a look at the options you have for ownership. Prices are currently at a level where you can own a home for payments less than rent in many cases. There are many areas of Jacksonville where homes are affordable. The Real Estate Market in Jacksonville is currently perfect for First Time Home Buyers.

Quality Mobile Homes in Jacksonville Florida has a great looking modular on their lot off of Normandy Blvd. The manager there is Joe Blaney and he was very knowledgable about the product. We are getting to a point where land prices have dropped enough that building in Florida can be proditable again. Its best to buy while the market is in a slump like it is now, as long as prices have adjusted!

Its a two story modular home that looks exactly like a site built house once its complete. The price to have the home set up is about $160,000 anywhere in the Jacksvonille Florida area. I am currently looking for good locations in Jacksonville to put one of these modular homes. I currently own 8 modular investment properties, I finished my last one about 18 months ago. I tool a break waiting for the real estate market to adjust before I built any more. Luckily I bought all of my land back in 2004 when prices were reasonable.

The rental markets in Jacksonville are still great and with FHA Financing Modular homes are very easy to finance for an end buyer. They can be a great real estate investment.

I am adding 4 more modular homes to my real estate investment portfolio.

I got a call today from the Police that the person who stole my A/C unit has been apprehended! He is going to be order to pay restitution so there is a chance I will get my money back, although as a dead beat I might now. Who knows, but I am glad to know this guy is off the streets.

You can read my original post about the theft here…

Apparently this guy stole A LOT of A/C units. I guess there is a big market for selling stolen A/C units on the black market. It seems like there would be much better things to steal for the amount of work you have to go through, but I am not a thief so I am not qualified to speak on such things.

After the original unit was stolen we began securing the A/C units to the piers below the home using a thick cable that cannot be cut with bolt cutters. This precaution is very inexpensive so even though this guy is off the street, we are going to continue using it.

Well I have closed on 3 more construction to perm loans and contracted to have 3 more homes built. The homes are being ordered and the lots are being prepared. I learned from some mistakes on the first home (I hope to put a page together of the mistakes I made and the corrections to share them with you all, keep checking back).

These are three 1,800 square foot starter homes, that my goal will be to rent and possibly sell. I figured I can use the cash flow and if I find the right tenant who wants to own, I can sell and build a replacement. I am still working on the Duplex concept, apparently not a lot of people have done this. Finding the right lot that is zoned for multi-family is difficult as well.

These homes should be done in a few months.

Well I leased the first home, and I am excited!

I was able to obtain a tenant on a Lease with Option to buy. They made a non refundable deposit of $3,000 that I will apply as down payment if they are able to purchase the home within 12 months. If they are not able to purchase, they forfeit the deposit, I figure this money will cover any possible damage that may be done to the home in the event they do not buy it. Any losses over $3,000 and I will file an insurance claim and it will mean they went pretty wild destroying the home! Lets hope that doesn’t happen, they seem like really good people.

I am getting $1,225 per month in rent and my payment is only around $1,000 so I will get to enjoy $200 per month in POSITIVE CASH FLOW for the next 12 months. They lease option also calls for a sales price that is around $20,000 more than I paid for the home. If I can make $22,000 in 12 months on a $5,000 investment I will be very happy!

After getting this unit leased I have decided to proceed with 3 more homes. I will keep you posted. I am also looking into the possibility of doing a MODULAR DUPLEX! If I do I will keep if for years, after looking at the initial numbers it could create significant cash flow for me. My plan would be to apply all of the cash flow to paying off the note and owning the Duplex free and clear one day. In the right area the Duplex can bring in around $1800 per month in rent, so if I one day own it free and clear thats a nice chunk of change. Of course there is not telling how high rents will be by the time I own it free and clear. I can’t help but do the math on owning 10 Duplexes free and clear one day, I could have a nice six figure income just off of my Duplexes one day. This is what Modular Cash Flow is all about!

I have shown the home to a lot of people. The market in my area is pretty bad right now, there is a record amount of home inventory for sale. I am pretty happy I built modular homes because they are affordable. I have shown the home 4 or 5 times now and have some interested people. I am asking for $3,000 down on the lease-option, and the few interested people are attempting to come up with the money.

I am trying to look at the credit to make sure they will be eligible for financing in 12 months. I am shooting for FHA mortgage financing at the end of the 12 months. Most FHA lenders are looking for around a 580 credit score and allow some credit blemishes. I am putting the applicants in contact with a loan officer so have their credit pulled and get an opinion on the ability to finance them in 12 months. The potential buyers have been very willing to work with the lender and feel safer about entering into the lease option knowing a lender has reviewed their credit and feels they have the potential for financing if they pay their bills on time for 12 months.

My first home is finished! It has been a real learning experience. After some hiccups during construction we are finally complete. I am going to advertise a Lease Option on this home to generate interest instead of listing with a real estate agent immediately. I have a very competitive rental price and i think the lease option will help me achieve a higher sales price and it will save me the real estate commission. I am going to run a simple ad in the classifieds of my local newspaper that lists the home “For Sale or Lease with Option to Buy”, I am going to have Empire Financial Lending my lender, talk to the applicants and see if they can put them on a 12 month plan to qualify for financing if they do not qualify immediately. This was I can help the person own a home and they can make me a good offer for my homes.