Over the past 50 years the mobile home industry has received an undeserved bad-rap. Similar to listening to the latest Hollywood gossip tabloids, not all mobile home gossip is 100% accurate 100% of the time. It is important to verify all facts before making unsubstantiated judgments that may write off an entire niche of real estate investing, potentially costing you financial profits.
Below are some of my favorite mobile home questions over the years:
Don’t mobile homes sustain more damages than traditional block or frame built houses?
Of course! Well it depends. If you put a mobile home and a site built home in a wind tunnel and crank the wind up, the mobile home would obviously roll-over first. Since 1994 mobile homes have been built with the highest of guidelines and safety standards. According to the Florida’s state website during the terrible hurricane seasons of 2004 and 2005 there were no significant structural damages to mobile homes built after 1994 reported.
Mobile homes built prior to 1994’s safety changes are built to safety standards that allow for safe and comfortable mobile home livin’. Based solely if a mobile home was built before or after these safety improvements makes no difference in the monthly income potential the mobile home may produce for you. Every dwelling is subject to violent weather, vandalism, insects, acts of God, etc. When all else fails get insurance to offset your worry. Over insure your mobile home and pass this cost to your tenants or buyers.
Aren’t mobile homes only found in southern states?
Mobile homes are spread throughout the country — in big cities and small towns. As of 2007 there were over 37,000 mobile home parks, each with dozens of mobile homes in each park. Add those numbers to the numbers found on www.statemaster.com to determine your state’s rank in mobile home abundance compared to other states.
Don’t I need a dealer’s license to buy and resell mobile homes?
Yes and no. Most of the time when someone asks this question they are referring to buying and reselling mobile homes inside preexisting mobile home parks. Mobile homes inside parks rent the land they sit atop from the park directly. Most states consider these types of mobile homes as personal property, similar to the title on your car. Many states require a license be obtained only after a certain number of transactions (bought and sold) have been completed per 12 month period. Check your own state’s website to be certain.
A mobile home located outside a park will typically be sitting on land which will be bought and sold with the mobile. These homes (with land) are taxed as real property and therefore will require a yearly property tax be paid for land ownership. Invest in these mobile homes the same as you would a traditional site built property.
Don’t only poor folks live in mobile homes?
Yes, amazingly this question is asked to me more often than I would have thought possible. It is this negative mental roadblock that is keeping so many investors from profiting in this type of real estate. The answer to this question is of course a resounding “NO.” Do not mistake someone paying a lower mortgage payment as being poor. New mobile homes can cost between $18,000 to over $130,000 for a large basic model, not including the land the home will sit atop.
The obvious truth is that there are millions and millions of mobile homes spread throughout the US. The same quality scale that you have in your mind for ‘regular’ homes can be applied to mobile homes. The nicer the home the more demand and higher cost you may charge for this home. My general rule of thumb when figuring out what to charge for a monthly cash-flow payment is to look to comparable apartment rent. A nice 2/2 mobile home will typically attract a monthly income equal to that of a similar size apartment or condo rent.
Doesn’t Warren Buffet have something to do with mobile homes?
Yes, the king of Wall Street, Warren Buffet invested 1.7 billion of his Berkshire Hathaway’s capital by purchasing Clayton Homes Inc, one of the largest manufactured housing companies in the world.