Mobile homes??? Good investment?

Question

Account Closed · Answer

Everything considered it is probably a good business model for those investors who have the ability to deal with people with "more limited" resources. I was in a nice doublewide in Santa Barbara CA (Carpinteria CA) that sold for $750,000 and I was in a single wide in Seattle that sold for $600. And there is everything in between. Location and condition play a huge role. Some you can get financing on but many you can not and it is a cash transaction. Narrow down your market and you can make some good money.

Brian Kosack · Answer

55+ seem awesome, and much less expensive but are people over 55 renting?  will the community allow someone in their 30's to purchase?   the HOA fees are crazy high and i imagine you couldn't get as much for a mobile unit with the same bedrooms as a condo or single family.  could be wrong.

Jonathan Holmes · Answer

My older sister owns roughly 40 to 50 mobile homes. She has them in a few different parks. Her original strategy was to owner finance them to people. After she realized almost every person would default and lose their down payment she felt morally compelled to transfer to just renting them. This has been profitable as well. The lot rent will have a lot to do with your cash flow some areas it is so high to make renting prohibitive. If you can rent the trailer for 500 dollars and lot rent is 250 you will have a hard time making money. She has tried to pass lot rent onto the tenant but it still will hold down your rent.

The upside is that you can pick up one of these for a couple grand put a couple grand into it and then rent it out for a profit. The one I own with her she charges 450-500 for rent and the lot fee is around 150. Everything else is profit.

It is still risky, no insurance all cash into it. It is certainly not for everyone.

Charlie MacPherson · Answer

@Brian Kosack  If you mean buying a mobile home PARK, there have been a couple of BP podcasts on the topic and yes, they seem like good investments.

Individual mobile home units may also be good, but they're an entirely different beast and require a different type of financing.

At least in the parks around here, you almost never own the land.  That means that lenders treat them as "personalty" (personal property), not "realty" (real estate).  As a result, mobile homes are normally financed with a personal property loan like you would get for a car or a boat.  In general, the park has to approve the tenant too.

The park fee can be higher than local condo fees running in the $500+/month range here in the Plymouth / Carver area where I recently sold one and have another under contract.

The other interesting feature is that there is no obvious distinction in our MLS (MLS PIN) between a manufactured home and a trailer home, except for verbiage in the listing description.  They are all listed in the mobile home category if they're in a mobile home park.

That said, acquisition prices tend to be much less than a stick built home on owned land.

I recently helped a buyer to get a brand new trailer home that was a double-wide and over 2,200 sq ft - 3 beds, 2 full baths, in a 55+ community for $147,000 with upgrades for a car port and central air.

The unit I have under contract with a buyer in a different 55+ park is a manufactured home, also 3/2 with car port and central air at $179,900 - and it was built in 1985.

If you're thinking of buying individual homes to rent to tenants, I'd consider a 55+ park on the theory that people that age will hopefully not be engaged in as many, shall we say, "youthful indiscretions".