Mortgages & Creative Financing

How Mobile Homes Being Bought And Sold Like Cars Can Be Great For Your Business’s Bottom Line

Expertise: Mortgages & Creative Financing, Landlording & Rental Properties, Business Management
26 Articles Written

The first word of a “mobile home” is not a very accurate description of these homes.  In fact, to move a mobile home, have it set up, utilities hooked up to the home, stairs moved/built, and skirting installed, you are looking at upwards of $5,000 and that’s just for a single wide.  In other words, they can be “mobile” but not until a lot of money and hassle has been put in.

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With that said, in my state, they are considered personal property and are treated like cars where the transfer of the title takes place at the Department of Motor Vehicles (DMV).  It costs us $15 for each title transfer (very cheap, especially if you only invest in mobile homes.)

For us we still have to go through a closing with an attorney first (South Carolina does not allow title companies) because we are buying the land as well as the mobile home so our transfer costs are typically between $400 and $700.

You may be wondering: “What good does this do?”  The main benefit that we have seen is in the lowering of property taxes.

Property Taxes

First, let me give a quick case study of the property taxes in my state (South Carolina) to illustrate how the local government here has burdened investors with taxes:

I purchased my personal residence in Summer 2012 that happened to be bank-owned.  The previous owner had moved out of state and apparently couldn’t keep up with the mortgage.  Keep in mind that they were no longer claiming this home as their personal residence.  The property taxes for the previous owner in 2011 were around $2,900 with a tax-assessed value around $110,000.

When I moved in, I declared the home as my personal residence and fought the assessed value. The assessed value was reduced to $105,000 (doing virtually nothing to the tax bill) and my property tax bill with the personal residence claim for 2012 was around $600.  This wide variation in taxing between owner-occupied and non-owner occupied greatly affects the investors in my area.

I may be stating the obvious but just to give another representation:  the county collects a nearly identical amount of taxes for a $100,000 rental and a $500,000 owner-occupied home for homes in a similar part of town.  I could be wrong, but I don’t think I will find anybody on BiggerPockets who will say that that is fair.

So the question becomes:  “What can you do?”

We Have a Few Strategies

The main strategy is the asset class we are involved in.  Because mobile homes are treated like cars, the tax assessed value of the mobile home goes down each year.  For our homes that are over 20 years old, the property tax on just the home tends to be under $100.

Most of our property taxes (home and land) tend to be around $600 per property.  This is a great benefit in investing in cheaper properties, which does not cripple cash flow like my personal residence would if I convert it into a rental.

This sounds great but if you find a great deal on a newer home, then this strategy won’t be as effective.  I’ll give you an example of our second land-home deal and what we did to counteract the high taxes:

**I should warn you that the method we used is in the gray area of legality in my opinion.  You should probably consult with an attorney before using it and honestly it may not even work in your area due to the different way that your local and state government may be set up.**

Since we have gotten the disclaimer out of the way, let’s look at the deal:

We purchased a 2008 3 bedroom mobile home on 1 acre in a town that we like to invest in (same county but different town from my personal residence).  Our property taxes on this home (non-owner occupied) for 2012 were set to be around $900 for just the home with the land taxes around $300.

We decided to put just the mobile home title in our tenant-buyer’s name (quick transfer at the DMV as already discussed) and this quickly lowered the amount of the mobile home taxes to under $100.  We have continued to pay the taxes and agreed to discount the tenant-buyer’s next month of rent for helping us.

About 6 months later, the tenant-buyer left the home due to financial issues and we sold the home to another tenant-buyer.  We repo’ed the home at the DMV (again very easy to do) but kept the property taxes in our previous tenant-buyer’s name.  (The local county and DMV do not communicate in our area and must be notified individually when a change has been made.)

We have been fearful of putting the title in all of our tenant-buyer’s names because of issues when evicting (the tenant-buyer may be able to argue that they have partial ownership to the home) and issues with income taxes, especially in regards to the dealer classification by the IRS.  However, we have justified this strategy when the taxes have been quite high.

I should mention that some mobile homes you might encounter will be detitled, which means that the home and the land are considered together on the deed, identical to any site-built home.  In order to incorporate this strategy into your business, you will need to retitle the mobile home.

I would be happy to hear and respond to your questions and comments.

Photo Credit:shinichi

Aaron Kinney has been investing in mobile home and land properties since 2011. He writes about this occasionally at and helps ...
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    samuel sedore
    Replied over 6 years ago
    I gather from your article these mobile homes are on their own plot of land and have nothing to do with any type of trailer park?
    Aaron Kinney
    Replied over 6 years ago
    Hey Samuel, Yea, that’s correct. All of ours are on their own piece of land, not in a mobile home park.