Mobile and manufactured homes are typically built in factories that conform to regulations. The newer the manufactured home, the better standards/construction the home was likely built with. While there are many differences in mobile homes across the country, there are plenty of similarities as well.
5 Common Mobile Home Traits Investors Will See Across the Country
1. Community managers vary in quality.
Park managers can sometimes be excellent leaders who want the best for their communities and their residents. Other park managers can be selfish, malicious, and only think about themselves. Most of the time, the park manager you run into will fall somewhere on this scale.
Pro Tip: Before purchasing any mobile home in a community, make sure to speak directly with the park manager to understand all applications, rules, and regulations moving forward.
2. Mobile homes often carry a negative stigma.
When you were younger, did kids make fun of other kids who lived in mobile home parks? Do you ever call them “trailer parks”? If you have lived in the United States for any period of time, you likely know of the negative stigma associated with mobile and manufactured homes. Even in other countries, the thoughts of “caravan” communities are associated with gypsies and transient individuals.
Pro Tip: For active mobile home investors, this negative stigma is one of our advantages. If there were ever a “flip this mobile home” type of reality show, there would likely be a flood of wannabe investors flooding the market with overpriced offers and burning bridges with local parks.
3. There are a few common repairs.
Severe weather and temperatures do vary across the country. Some areas may experience heavy snow loads, while others battle hurricane winds or the scorching heat on a regular basis. While these extreme weather patterns do cause specific wear and tear issues in different areas of the country, there are typically common interior repairs needed in most mobile homes over time. These repairs include, but are not limited to:
- Sinking foundations
- Interior doors not aligning or missing
- Windows, walls, or ceiling water leaks
- Amateur electric repairs
- Holes in walls
- Smells and bugs
4. Lending is typically more restrictive compared to traditional houses.
Depending on the specific mobile home it may be easy, difficult, or virtually impossible to obtain bank financing for a used mobile home buyer. Not only does the mobile home need to pass specific underwriting criteria, the buyer, home’s foundation, and the park itself may also need to fit into a bank’s specific underwriting criteria before the loan is approved. A local bank or money lender will typically need to verify and approve:
- The potential buyer’s ability to repay and creditworthiness
- The mobile home’s foundation
- The amount of times the mobile home has been moved/set-up since being purchased originally at the factory
- The mobile home park and the lease agreement with the community
- The mobile home’s age
- The mobile home’s size and condition
- The down payment required from the buyer
Pro Tip: Reach out to local banks and mobile home lenders before you or your buyers need them. Aim to verify loan programs for new or used mobile homes. Also aim to call nationwide lenders, such as 21stMortgage.com, Vanderbilt Mortgage, and Triad Financial Services.
5. There’s a lower barrier to entry for buyers/investors compared to buying traditional houses.
Keep in mind some older mobile homes may reach prices over $100,000 inside parks. The supply and demand of your local economy can certainly drive the prices of average mobile homes higher and higher. However, in many areas around the country, mobile homes can still be purchased from time to time for prices under $20,000, $10,000, $5,000, $2,000, or less.
Pro Tip: Aim to have complete clarity in your marketplace with regard to all mobile home sellers. What mobile homes are they selling and what are their reasons for selling? Do not just rely on what is for sale online or in the local newspaper to determine which mobile homes are for sale.
Bonus: People are people.
While there absolutely can be differences in cultures around the country, there are high quality people and shady people everywhere. Aim to trust people only after you have worked with them on several deals. Verify everything a seller, buyer, other investor, real estate agent, or handyman tells you.
- Other Investors: Many investors around the country want nothing to do with any mobile homes. When you keep up-to-date with these other investors, they may send you their unwanted mobile home leads.
- Buyers: Many buyers around the country will not have the cash to purchase a mobile home outright or the credit needed to become bank approved. These buyers will need help and alternative ways to purchase a safe mobile home for their families.
- Sellers: Many sellers around the country face situations where they need to sell semi-quickly and are unable to find a buyer that has available cash, is bank approved, is park approved, is serious, or isn’t experiencing some additional hurdles.
In conclusion, every mobile home is a unique property. Every mobile home seller and buyer may be in a unique situation. There are typically no cookie-cutter approaches or offers to make with mobile home sellers. It is best to fully understand exactly what you are making an offer on, what you are buying, who you are working with, and all the steps needed to safely move forward in a win-win transaction. Aim to have other active mobile home investors you can speak with to get your local questions answered.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.