Posted by Steve-WA on June 18, 2008 at 20:05:51:
In Reply to: Determinig value of mobile homes.... posted by RP on June 18, 2008 at 16:18:03:
RP, try checking the archives - ton of valuable information there, particularly from Karl(OH).
Are you talking about wholesale value for purchasing, or retail value for selling?
Either way, *I* usually work backwards to get a selling price range - you can take that in half, third, fourth, or whatever to determine your purchase price for the spread desired.
What is the cost of housing offered by our competiton? In many areas, that is apartment rent. Say a 2 bedroom apartment rents for $500.
You would want to be able to offer the same, or better number for the buyer, so let's say that you want to offer a competitive housing cost of $400. What are market lot rnets? Subtract that, and you'll have a ballpark monthly payment; for our example, let's say that lot rents are at $200, which leaves $200 for a monthly note payment.
Say you think (as I do) that 3-4 years at $200/month is a good fair length for a note to run. Pick an interest rate (many of us use Lonnie's suggested "standard interest rate for used mobile homes", 12.75%.
Now using the financial calculator, plug in the term of 36 for N, 200 for PMT, 12.75 for %i (dividing or multiplying by 12 as your calculator may require), then CPT for PV, and you have a note principal balance range low limit. Tack on a reasonable downpayment, and you have your sales price. Do it again for N=48, and thats an upper limit for your range.
I get 5957 to 7489; guesstimate a $1K downpayment, and your price should range, for the conditions stated, 7-8.5K. Half of that would be a max purchase price.
Now this is NOT considering ANY holding or repair costs. For that reason, you may want to aim for a lower purchase price for homes that may require these additional costs. Many experienced Lonnie Dealers will shoot for buying at a quarter to a third of the amount for which they can create a note.
- thanks! RP 16:17:39 06/19/08 (0)