Alright, so I have to make a choice and I’m not really sure what to do. Back story is, I own an old manufactured home but not the land it stands on. So while there’s no house payment, there is a monthly lot rent of $375. I haven’t been able to afford to live in it (no job), so I’ve been renting it out to relatives for $500. At this point, the current relative has been there a bit under a year. I’ve decided that I need to sell however, because I’ll never be able to live there for various reasons and I can’t afford to fix any problems that might arise. And as long as I’m renting it, it’s my responsibility to fix it. And I don’t want that worry over my head.
So I want to get it out of my hair but I don’t feel right just kicking her out without offering to sell it to her. It’s a relatively small selling price, like $15k and I thought maybe she could get a loan for it and everything would be fine. Well, she can’t. I shoulda known better since she’s always paid rent in money orders. But my parents offered me a couple of suggestions of what to do. I’m not sure which carries the least risk for me.
Lease option. Basically, I’d continue our current situation where she just adds a certain dollar amount a month that would go towards buying the house. I would still own the home and be responsible for sending the rent to the owner of the land. I think in this situation, I’d still be responsible for any repairs needed right? What if she defaults or changes her mind? Do I have to give all the money back?
Have me carry the loan for her. Basically we’d write out a contract, she’d own the home and be responsible for paying me monthly, on top of paying the land owner monthly. I know in this case I’d have no responsibility for any home repairs but I’m a bit wary on this one. Mostly because the contract with the land owner says if lot rent ever gets behind, he can take the house that’s on it. So if she doesn’t pay the rent to him, the house is gone and while she’d still be responsible for the remaining loan amount, I think my chances of collecting would be very slim.
Sell the house to a third party and she’ll have to leave. Honestly, to me this sounds like the least risky option but it would cause problems with asking her to leave.
What do you guys think? My parents are pushing for option two since they don’t want me to kick her out. And I have a bit of guilt about doing that as well, but I’m also concerned about losing out on a lot of money. Are there any safeguards or anything in regards to the first two options? Or is the third option really my only realistic option?
I think you should give her a thirty-day notice and tell her to find somewhere else to live. If she is not in a position to get the loan herself, no matter what her intentions are, the note will likely fall back on you. Think of the worst scenerio and whether or not you are in a financial position to handle that. If not, you absolutely must not do it.
Suggest to your parents that they co-sign on a loan. Maybe that will help them understand your position. Not that they should do it, either! Your relative needs to find somewhere else to live and you need to concern yourself with your affairs.
I agree - the 30 day notice. You could tell her that you are just putting it up for sale, so perhaps the 30 days starts when the sale goes through? (Not sure of the legalities of that though…)
You could ask any future buyer if they would consider allowing relative to stay there - might be easier to sell if there is already a renter.
This would be an easy “out” for you - trying to do a good thing for your relative, but at the same time, putting the timely rent question/problem in her court.
Of course, there is no guarantee the future buyer would want to keep her in the place - maybe they want to move in or give to one of their relatives - but asking wouldn’t hurt.
Honestly, option 3. Does the relative even have extra money to pay you? Would the house payments be in excess of the $500 rent or the $375 lot fee? If you would still be responsible for repairs it seems like you’re just giving the house to her after a period of time and I don’t see how this benefits you. Wouldn’t you rather have $15K in your bank account, especially since you are unemployed?
I am sympathetic to the problems that arise with kicking out family but you have to do what’s best for yourself. If you can’t afford to keep a house you can’t keep it, it’s that simple. To echo Samantha Leigh, can you sell the house to your parents since they seem so invested in the situation?
Yeah I think option 3 is the best as well. I just worry about her cause, honestly she’s getting a damn good deal on the place. Similar homes rent out for about $800+ in that town and I know there’s no way she can afford that. It’s her problem, not mine I know…but I just feel bad. She’s been a good renter and she’s really made the place her home and ugh. Guilt.
My parents can’t buy the home cause they have no desire and don’t have the money to do it either. I have a really difficult time making decisions on big things and this isn’t proving to be any different.
Explain to her that the $125/mo. is not worth the head-ache, depreciation, & risk of maintenance. Also explain that similar set-ups rent for $800 but you’ll give her a deal at $675 if she wants to stay. Now you are making $3,600 a year and you could maybe sell to an investor if you wish as the return would be 20% (3K/15k) and $600 left for yearly repairs…you could write in a 48-month lease to relative as point of sale. If she cannot accept $675/mo. then you’ll have to sell. GL
While I generally agree, keep in mind that getting a loan on a used mobile home on a rented lot is pretty damn difficult. Most banks won’t do it at all, and those that will treat the loan as essentially unsecured, so expect interest rates closer to a credit card than a mortgage. The relative’s inability to get a loan isn’t necessarily an indication of being particularly financially irresponsible or non-creditworthy.
And, yeah, nobody is going to buy the thing as an investment (mobile homes depreciate!) or rental property except maybe the land owner.
Getting a loan on a used trailer is pretty difficult period, doubly so for people in the demographic cohort who need to rent trailers. Banks treat the depreciation on them , and with some justification, like cars.
Before you start the wheels on moving her out you might want to double check that the prospects for selling your trailer for $ 15,000. cash is realistic. Most of the used mobile homes I see advertised on CL are asking about half that price. Have you nailed this price down as real world selling price for your trailer in it’s current condition?
You need to move as quickly as possible to get rid of the trailer. If her finances are weak and she is family she will likely simply walk away from any financing deal you have arranged if she loses her job or “stuff happens”. This is almost guaranteed. At that point, assuming you have no cash flow the trailer will become attached by the park owner if the lot rent is unpaid.
Your situation is very precarious right now as the only thing letting you hold onto the trailer is her monthly payment and you have no money for critical maintenance if required. You are on a knife’s edge. You need to dump that trailer ASAP even if you do so at a discount.
Job one is to get your arms around what the real world cash value of that trailer is and blow it out.
Believe it or not there are people that specialize in investing in mobile homes because the returns can be quite nice under the “right” circumstances. Of course, this particular situation may not be the right set of circumstances, who knows. For those margins, the risks, and depreciation-factor you mentioned, $15K is likely too high for an investor; however, there is a number that an investor will pay. While appraising manufactured homes for two years I learned that most owners over-value their homes. If this is a single-wide an investor will likely not exceed four-figures unless it is very new.
Well, it’s a double wide, 1300sq feet. Two bedrooms, 2 baths. Pretty good condition given its age (1978). I’m hoping to get about what was paid for it 4 years ago (15k), but I’m aware that they depreciate so I’m willing to go lower. How would I find someone to appraise the house and what’s a ballpark range on the price? If I’m planning to sell on my own, would it even be worth appraising or should I just see how many bites I get from a price I set? Manufactured homes actually sell quite well in the area of Oregon I’m in, so that’s in my favor.
Most of the time guides like these are useful for setting the high end pricing and you have to accurate about condition. If you are in an area with plenty of mobile home lots that’s huge plus re getting a better price.
I’m not sure a 35 year old double wide trailer is going to bring $ 15,000 just due to age issues, but who knows.
Maybe have a mf home broker come out to give an estimation of value? I’m not sure of your exact area but someone like this: http://www.cmshomes.biz/index.html
I found this by searching “Oregon Manufactured home broker”.
I’m amazed by how many Oregon mobile home setup companies there in that website. Mobile homes must be far more popular in Oregon than MD. Here there are many laws and regulations restricting them.
They are super popular here. Where my place is, the entire neighborhood of like 30+ homes is mobile homes. And nice looking ones. Not the ones people typically think of. And the land’s all owned by the same guy as well. From what my parents have told me, there’s almost no laws regarding the sale of a mobile home. You can do it all yourself and make it just be more or less a cash transaction (minus the deed transfer).
Yes I agree with others. Find a real estate agentand dump the mobile home quickly. These things only depreciate in value. Family-wise, it seems that you have been more than generous with your relative and hopefully if you explain the situation to her she will understand.