In 2019, mobile home prices in many areas around the country are seeing a small or noticeable increase in selling demand and prices. This is more noticeable in some areas versus others.
The reasons are simple. They partly stem from single family home prices and apartment rental prices drastically increasing. The high cost of living the more traditional ways is pushing people to purchase mobile homes on private land or inside pre-existing mobile home parks.
This higher buying demand may allow you to more easily wholesale used mobile homes to buyers inside of mobile home parks, on private land, or in must-be-moved locations.
Disclaimer: If you are licensed as a mobile home dealer, mobile home broker, or Realtor, you may be able to broker mobile homes instead of wholesaling them. Brokering mobile homes involves entering into a contract with the seller to be their personal property mobile home real estate agent and help them find a buyer.
What Is Wholesaling?
Wholesaling a mobile home equates to assigning your mobile home purchase contract—an agreement between you and the seller—to another buyer via an assignment agreement for a higher price. You never own the home.
Quick reminders about the mobile home wholesaling process:
- Wholesaling a mobile home located on private land: Once the seller and you have negotiated a verbal win-win purchase price/terms, a “Purchase and Sale Contract” should be entered into. You will then quickly aim to find a buyer that wants to purchase the mobile home contract from you at a higher price. The potential buyers will want to walk through the property to examine the home for themselves prior to closing. The difference in price between the amount you agreed to purchase the home for, and what the new buyer agree to pay, is your profit. This may be paid out before closing or at closing by a title agent, escrow officer, or closing attorney.
- Wholesaling a mobile home inside a pre-existing mobile home park: Once the seller and you have negotiated a verbal win-win purchase price/terms, a “Purchase and Sale Contract” should be entered into. You will then quickly aim to find a buyer that wants to purchase the mobile home contract from you at a higher price. The potential buyers will want to walk through the property to examine it for themselves prior to closing. The potential buyer may wish to get approved by the mobile home park prior to closing. The difference in price between the amount you agreed to purchase the home for, and what the new buyer agreed to pay, is your profit. This amount is ideally paid to you as a nonrefundable deposit by the potential buyer prior to the potential buyer filling out the mobile home park’s application. This amount is paid directly to you and is your fee for wholesaling the mobile home. Your buyer will then pay the purchase price you negotiated directly to the seller and take title to their mobile home.
- Wholesaling a mobile home when the mobile home must be moved: This method is very similar to the steps above, however no park approval is needed prior to closing. Having relationships with mobile home movers can be helpful to point your buyers towards for prices and moving questions.
Pros to Wholesaling Mobile Homes
Wholesaling mobile homes is certainly not the end-all be-all of mobile home investing. It is simply one more tool in your toolbelt. Wholesaling mobile homes can help in situations where you cannot close on an attractive mobile home opportunity.
1. Potential quick cash
When wholesaling or assigning mobile home contracts we are typically making smaller quick chunks of capital a few thousand dollars at a time.
2. Minimal capital risk
While wholesaling or assigning mobile homes there is little to no money out of your pocket, except for advertising and transportation costs. You do not pay any holding costs.
Optional: Depending on the condition of the home and your confidence on an all-cash sales price, you may want to make a few strategic repairs in order to sell the mobile home quicker and for a higher price. However if you are not able to resell the home you may lose this money invested unless you place a small lien on the property.
3. No credit check
While wholesaling mobile homes you will not need to get approved by any mobile home park unless you plan on actually closing on the mobile home and taking ownership.
4. Knowledge gained of the local market
Whether you are able to sell a mobile home contract for a higher price, or you have to walk away without fully helping the seller, you will certainly learn more about what buyers are willing/able to pay all-cash in your local market, depending on the mobile home and neighborhood in question.
Pro Tip: As an investor, you may also wholesale a mobile home Purchase Contract you negotiate with seller financing (making monthly payments to the seller for the purchase price). This would allow your buyer to make payments to own the home instead of paying an all-cash price. This would allow the buyer to pay you an all-cash assignment fee and then make payments to own the mobile home directly from the seller.
5. Estimating repairs better and better
While wholesaling mobile homes you will need to take into account what your end-buyer is going to be spending to rehab the mobile home before placing it on the market for a profit.
Pro Tip: When estimating repairs aim to get written bids by handymen or contractors when it comes to rehabbing the subject mobile home. The more information you can provide the potential buyer the better.
6. Growth to reputation
The more mobile home owners you are genuinely able to help, the better. Mobile home folks typically know other mobile home folks. Your name will get around because you become a local authority in the marketplace that is easy to talk to, friendly, and typically able to offer some type of help. The squeaky wheel gets the grease. Be assertive when speaking with mobile home owners, sellers, park managers, and more. We want to make sure people know how we may help, our phones are always on, and how to work with us moving forward.
Pro Tip: Aim to have a mobile home buyers list prepared before ever wholesaling a mobile home contract. This is not required however will certainly expedite your first few mobile home contract assignments.
Wholesaling Mobile Homes: The Cons
While wholesaling mobile homes there may be a few unexpected negative consequences that you may find. Some of these negative consequences are…
1. Burning bridges with mobile home parks
You may sell to someone that wishes to remove the mobile home from the current mobile home park. If your name ever gets back to the park manager that you are involved in the deal, you could burn a bridge with this mobile home community. Mobile home park managers and park owners do not want to deal with investors that remove homes from the community. Unless the park is genuinely happy for this particular home to be removed.
2. Negative reputation
You will not be able to wholesale every mobile home you get under contract. It is important to never over-promise when your intention is to wholesale a mobile home. Important: Be honest with your sellers and buyers. Let your sellers know that you have a large buyers list and will likely be able to locate a serious cash buyer. Do not promise that you will necessarily purchase the home yourself. Let your sellers know that you are working with the buyers to purchase their home and pay the seller the price agreed to in the Purchase Contract.
Pro Tip: Blast all your properties for sale to your buyers lists immediately. There is no time to wait around. If you are unable to find a serious buyer in a few weeks or less, do not waste the seller’s time or money by keeping the mobile home under contract any longer. Let the seller loose and encourage them to continue reselling it online and off-line as much as possible.
3. Getting cut out of a deal
While dealing with mobile homes attached to private land there are methods to cloud the title/deed or sue a seller for nonperformance of a contract. However, when dealing with mobile homes considered personal property, there is little way to prevent the seller from going around you if they truly want to cut you out of the deal. Holding the seller’s mobile home title (if applicable) would provide you some protection however a duplicate may be made and resold before you are able to find a buyer.
Example of a seller going around you: You do all the work to find and negotiate a mobile home in a park for sale and get a Purchase Contract signed. The buyer you are working with talks directly to the seller and agrees to pay them $500 more to sell the mobile home directly to them. You are now cut out of the deal for connecting the seller and buyer. This does and will occasionally happen concerning mobile homes considered personal property. In these situations we proceed forward with business as usual and never work with this buyer and seller again.
Should You Hold onto the title(s) Prior to Closing?
Concerning mobile homes that “must be moved” and mobile homes located in pre-existing mobile home parks, it is ideal if you are able to hold onto the seller’s mobile home title(s) while you are locating an all-cash buyer that wishes to own the seller’s home for a price higher than you are paying. Holding onto the seller’s mobile home title while wholesaling will help prevent the seller from going forward with another buyer and cutting you out of the deal. While holding onto the mobile home title is preferred, many sellers will simply not feel comfortable handing you their mobile home’s title without any money exchanged. In these cases we move forward as usual by trusting the seller and not holding onto the title.
Pro Tip: Aim to only deal with sellers that truly appreciate your service and want your help. If you find yourself “selling yourself” then this may not be the right opportunity for you. You will experience problems and be cut-out of deals by sellers that do not see your value and appreciate you from the very beginning of the arrangement. We are looking for sellers that are fed up with their situation and tired of doing things on their own.
Free Mobile Homes—Wait, What?!
Mobile home sellers that are selling free mobile homes are more likely to hand over their titles and sign a Bill of Sale without you giving them any money. In these situations, it may be wise to place the mobile home’s ownership into your name, a trust, or your company’s name before reselling it to the next buyer. Keep in mind if you transfer ownership you may need to get approved by the local mobile home park and pay transfer costs to the state on the mobile home title. Additionally, depending on the state it may take a few weeks or months for your new title to be delivered via mail. If your state is slow with title transfers and mailing new titles than it would be wise to simply wholesale this mobile home via a Purchase Contract with you and the current owner, and an Assignment contract between you and the buyer.
Wholesaling mobile homes can certainly be helpful and provide you with another strategy to help sellers, however it is typically not a mobile home investor’s main strategy for creating value with mobile homes. Like many things in real estate, a mobile home wholesale deal can be quite simple or very complicated depending on the specific situation and people involved. Moving forward if you have any mobile home wholesaling or mobile home brokering questions, deals, or concerns never hesitate to comment below.
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