What’s in a cash offer from one of those California Mobile Home buyer?
Are they low-ball offers?
How much would I be getting?
How much profit do investors make?
If you’re considering selling your mobile home, and you noticed that you can get a cash offer from one of those “I Buy Mobiles Homes” ad…
… then read how I reveal the insider secrets to a mobile home buyers/investors formula to a cash offer… and the pro’s and con’s to them.
… Answers that almost every investor knows but won’t tell you—straight from the horses mouth.
Here’s the exclusive
You’ve probably got SOME idea that these offers aren’t full retail value—meaning, if your property can sell for $30,000 as it sits, then most likely you won’t get $30,000 for it.
Full retail cash offer from an investor is almost impossible (they’re out there, but they’ll get wiped off the market like dust in the wind… but there is a formula to this and ill explain below.)
Do you even need an investor?
First off, let me tell you that there’s a likely chance that you might not even need an investor to buy your house. You might be interested as to what this cash offer is, and ASSUMING that they’re going to pay you full cash value.
If you’re just curious and are expecting full retail value, then don’t even bother.
In those cases, where you have the time and a good-looking house, then it’ll behoove you to use an agent.
But if you’re in situation where you need to get out fast, eviction/foreclosure is around the corner, you can’t afford the home, or your house is too cluttered or in great need of repair to sell it decently, then a cash offer from a professional is probably your best chance to killing that pain and having future peace.
How much is a cash-offer you ask?
Here’s the quick formula:
Know the price your house will sell for fixed up, then take 20%-60% of that and that’ll be your offer.
So, if you have a house worth $80,000 fixed up… then expect an investor-offer of anywhere from $30K-$50K. However, Keep in mind, that all this depends on how much the space rent is, and what it costs for repairs.
Does that sound crazy?
Well I guess it is depending on the situation.
The reason why it’s a discount of big percentages is because you’re dealing with very low prices and with very little profit.
What to know how much an investor makes on these?
You’re home is worth $25,000 dollars rehabbed.
And it’ll take $7,500 to fix it up.
It’ll take another $1,200 for a couple months.
So, imagine the investor offered you $10,000 (that’s 40% of the after repair value and is actually a bad deal for the investor I’ll show you below).
Now lets do that math:
$25,000 (resell price)
$10,000 (Your offer)
$7,500 (repair cost)
– $1,200 (monthly costs)
= $6,300 (profit for the mobile home buyer)
So in this made up scenario, an investor who MIGHT pay $10k for your mobile home and MIGHT resell for $25K…
… will profit $6,300 while an agent will make $5,000 for listing that same house….
While the house is being fixed or trying to sell, any shift where the market changes, or an accident happens… then that little $6,300 of profit (which probably took 3 months to get) can go to ZERO and even NEGATIVE over night.
- the investor takes all the risk… (while an agent takes NO risk)
- the investor will risk the property not selling… (while an agent can walk away with no money out of pocket)
- the investor will continue to pay space rent, insurance, and remodel cost every month… (while the agent pays nothing)
- the investor deals with bad contractors and flaky buyers… (the agent only deals with buyers)
- the investor will have a hard time sleeping for those houses that aren’t selling… (while the agent sleeps like an angel because he/she has nothing invested in the property)
So… as you can see, with a lower priced home, it’s not worth it for an investor to only make $5,000-$10,000 while an agent makes the same with no risk.
$5,000-$10,000 isn’t enough cushion in the mobile home industry to be safe.
So realistically, on a home like that, expect your offer to be more like $5,000 or less.
Look at this way…
if you call a plumber out to do a half hour job, they aren’t going to charge you only a half hour of work, because it’s not worth coming out for just a little pay. They are going to charge you a minimum of 2-4 hours of labor even if they only took 10 minutes on a job.
But, if its an emergency and you need a pipe fixed ASAP, you don’t care if you paid 4 hours worth of work rather than 1 hour… You just want it completed.
So, why even take a cash offer from an investor?
Because, just like the above plumbing example, you might require a guaranteed solution to your situation.
If you’re in a situation of a dire need to get out ASAP, you have two options:
You can wait to see if you get another buyer, but…
- … risk waiting for a full retail value price…
- … risk waiting a long time to get a home sold.. (I know how it feels to wait 6 months for a home to sell, and it was remodeled as well.)
- … risk miss-judging the true value of your home (this happens even to me)
- … you can keep paying the monthly space with money you might not have…
- … you can have a hard time sleeping at night because of your situation and a home taking too long to sell
- … you can risk the park just finally taking your mobile home from you… (in that example $5,000 in your pocket is a lot better than nothing and an eviction on your record.)
You can wait… and wait… and wait to see if you get a full retail value.
But, this is what MIGHT happen (and has happened to me).
I know what you’re thinking… “well what happens if I take an investor offer and then I find out that I could have sold for a lot more very quickly… then that means I lost out on more money!?”
Well, that certainly can be the case. But, the only way to find that out, is if you try and sell it yourself and risk the difficulties that might come.
But, is the stress of going through a very difficult situation, just to see if you can get a little more, worth it?
That’s up to you to decide.
When I lost money on one of my investments, this is what happened to me and can happen to anyone:
As the months go by, you keep getting disappointed with these flakey buyers. Park management keeps sending you letters on rent due, and you pay it.
Another month goes by, then another month, and then another $650 is given to the park as a “gift” for a house you don’t want anymore.
Then someone suggests, you need to drop the price, the market has taken in a turn in this park. So you drop it $5,000 less. And you do another open house that week.
But no leads.
Then another price drop… and another… until finally…
…. 4-6 months later (and $5,000 of rent space and insurance and utilities paid out of pocket, and $20,000 less than what you expected), it’s sold… finally.
Or… your other option is:
You can have your home sold in 1 week to a buyer today.
- Get the guarantee your house is sold and never risk the mobile sitting for months just losing money.
- Never deal with headache buyers who are just flakey and disappoint you
- Never deal with the agent calling you saying, “only one potential buyer showed up to the open house today and they weren’t interested”.
- Never deal with the realization, months after, that you listed the house for $10,000 more than it should’ve (it’s happened to me and it’s not a good feeling).
- Pay nothing out of pocket
- Never deal with picky buyers (they don’t like the paint color, or the floor, or they wanted a new a/c, etc.)
- Sell your property as-is (bugs in all, investors usually take it)
Well, the truth of that is… if you’re in no situation where you need to sell it quickly… then its not a big deal. So what. You’re in the hole for $5k or more if you happen to let the home sit waiting for a buyer.
you have another mortgage to pay
have no money to pay that rent space
having medical issue and need to move ASAP
need to move out of area for another job opportunity you just got
need to pay debt that keeps piling up
need to move in a week for whatever reason…
Than, that offer that’s less than what you expected is much better than paying all that money out of pocket AND suffering through all the pain of staying in the house.
Like I said before. A cash offer from a mobile home buyer is not for everyone.
In fact, If you call me today for a free consultation, I’ll be straight forward as to what you should do for your next step.
But, I’m not here to steal equity from people. I want to help you get out of your situation so that you don’t suffer through the pains of a house not selling (like I’ve been through with my own investments).
But of course, like the emergency plumber, any resources I put into something to help a person out, any time I put to bring a home back to a good family, and any risk I put into something… has to be worth every ones time.
It’s really no-obligation to see if I can help you today.
And if you still think I’m taking too much and offering way too little, then It’s no big deal, I understand.
But it doesn’t hurt to find out what your cash offer will be.