About to Start Investing Career in Mobile Homes

Mobile Home Park Investing

About to Start Investing Career in Mobile Homes

Omar NaguibPro Member

Amarillo, TX · Member since 2014 · 28 posts · 6 votes

Hey guys! My name is Omar Naguib, I'm 18 and am hoping to start my investing career in mobile homes. I hope to get minimal cash flow ($50 - $100), the point of this early start is to learn so I can become a full time real estate investor at 25. Sounds like a plan, right? I've got a problem. I've been going back and forth on what type of an investor I should be, and right now I'm settled on mobile homes. I have some worries, though. I've heard that tenants can cost you big money by ruining the home and costing you repairs. I also hear that park managers can be a pain in the butt (I'm pretty easy to get along with, but still a worry). Are these legitimate worries? Should I be concerned with renting and just fix them and sell them? I'll probably start out with only $2,000, so mobile homes are really my only hope to start investing early. What are some ways to lessen the risk, besides educating oneself (I'm in that book reading process now), such as inserting certain clauses in the agreement about damage to the property?

Thanks for the help, I really appreciate any feedback I get.

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Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes

I know some investors who love renting out mobile homes, but they only do it on homes attached to land and most of their renters are families. It can work but probably not for a beginner with no experience.

I highly recommend you try to find a local investor group and see if there are any mobile home investors. They can greatly assist you in getting started. Barring that, take a look at John Fedro's materials and read everything you can here on BP. Mobile homes are a very different type of investing than single family homes and apartments. Yes, the tenants are a different breed but you can also find some overzealous local city and county officials who can make mobile home parks a pain to run.

The Dodd Frank bill changes everything for anyone trying to seller finance and it could mean some ridiculous fees. Also, in Texas, you can only sell three homes a year without getting a dealer's license. Good luck!

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Andrew Davis
Troy, AL · Member since 2014 · 2 posts · 0 votes
12y
In reference to your comment about tenants and park owners, I think the biggest issue is whether you plan to rent the mobile homes or seller finance. Many park owners will not allow you to rent out homes in their park.

Another reason I'm much more in favor of seller financing is that your "tenants" (even though they're technically not if you seller finance) have a financial interest in the MH. This means they're much more likely to treat it well.

Why does that matter? Because if they decide to leave in the future and stop making payments, then you get the property back to re-sell AND you keep anything they've paid to date.
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Omar NaguibPro Member
OP
Amarillo, TX · Member since 2014 · 28 posts · 6 votes
12y
@Andrew Davis - Well, I'm still very green with mobile home real estate. I haven't even read my first book on it (waiting until Lonnie Scruggs updates "Deals on Wheels," for 2014 regulations), so excuse the confusion, but seller financing would entail buying a mobile home and selling it for little down and monthly installments, correct?

If I am correct on that definition, then I understand completely, and appreciate the advice. Is renting in the mobile home market essentially dead then? Because that was my main idea on an exit strategy.
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Sam Parkins
Contractor · Charlottesville, VA · Member since 2010 · 99 posts · 63 votes
12y
@Omar Naguib

Unless someone takes over the reigns for Lonnie's books then I doubt that is happening as he passed away last year, may he rest in peace. Further, he would speak about trudging through regulations and meeting what you could within the "line of fire", meaning he wasn't too "worried" about the regulations changing the business.

Regardless of his thoughts, there are a bunch of forums on here regarding the new regulations. I would read those religiously as @Ken Rishel and Bill Gulley have posted extensively on the regulations and they are the go-to for that information. Look them up or look up Safe Act or Dodd-Frank posts in relation to mobile home investing. Further, for help in learning about mobile home investing @John Fedro and his site are a great resources.

It's not as easy as collecting payments anymore, unfortunately.

I think you'll read enough and figure out ways to get deals done (for starters get an originator or attorney (state depending) to close your deals if your exit is seller financing) so my best advise would be to get to as many parks as you can and meet the managers/owners to start creating those relationships. As you get through enough and find out enough about their rules you'll be able to focus in on an exit that works best by the numbers of what you would be allowed to do - and WANT to do.

And if you do rent - don't overdue your fix up. Mobile homes deteriorate a lot faster than stick built homes and will not hold up as well.

Best of luck to you!
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Andrew Davis
Troy, AL · Member since 2014 · 2 posts · 0 votes
12y
Omar, yes that's what I was referring to as seller financing.

I wouldn't say that renting in a mobile home park is definitively dead, but the overwhelming majority of park owners in my area have rules against it. You'll just have to check around and see.
0 Reply
Belinda Lopez
Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes
12y
I know some investors who love renting out mobile homes, but they only do it on homes attached to land and most of their renters are families. It can work but probably not for a beginner with no experience.

I highly recommend you try to find a local investor group and see if there are any mobile home investors. They can greatly assist you in getting started. Barring that, take a look at John Fedro's materials and read everything you can here on BP. Mobile homes are a very different type of investing than single family homes and apartments. Yes, the tenants are a different breed but you can also find some overzealous local city and county officials who can make mobile home parks a pain to run.

The Dodd Frank bill changes everything for anyone trying to seller finance and it could mean some ridiculous fees. Also, in Texas, you can only sell three homes a year without getting a dealer's license. Good luck!
2 Reply
Brian Mathews
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
12y
@Omar Naguib

Texas has some laws regarding selling mobile homes. You have to be a licensed. There are classes and a test to take to do it. Look online you'll find the info needed.
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Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
12y
$2k is a very small amount to start investing with in RE for the buy and hold investor, I would suggest you continue your education and save while doing it. Perhaps get a second job with a property management company, a RE office, or something in the RE field that would help speed up yr education while also providing an additional paycheck for savings.
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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
12y
Originally posted by @Will Barnard:
$2k is a very small amount to start investing with in RE for the buy and hold investor, I would suggest you continue your education and save while doing it. Perhaps get a second job with a property management company, a RE office, or something in the RE field that would help speed up yr education while also providing an additional paycheck for savings.

Great advice and a really good way to learn a lot about the real estate industry in general while saving to get started. Just wanted to highlight and give my vote to Will's advice.
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Matt B.
Investor · Vincennes, IN · Member since 2013 · 223 posts · 108 votes
12y
As a park owner, and in light of Dodd Frank, I think you will start to see more communities willing to work with investors. If we wanted to rent out homes we would own apartments instead of parks. The thing is, most of us just want to rent the dirt, not the homes. Thus to continue to fill lots and be profitable we are having to adapt and are becoming investor friendly.

So to voice a different opinion, I would suggest finding a park owner to work with. For a couple thousand bucks, investing in a mobile home rental would be an inexpensive way to start and learn this business. And if you make any mistakes, which you will, better now than on a million dollar investment later.

Much success.
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Omar NaguibPro Member
OP
Amarillo, TX · Member since 2014 · 28 posts · 6 votes
12y
@Sam Parkins - Lonnie's site indicates that those books are not for sale until rewritten to include Dodd-Frank rules. Not sure if that means he passed away while working on them or someone else is rewriting them. Either way, may he rest in peace. My thoughts exactly, I will start networking with park managers, and take a look at John Fedro's products.

@Andrew Davis - Noted, I will look around at different parks and see what their individual policies are.

@Belinda Lopez - I've decided I'll join two investing groups in my hometown, so I hear you on that one. I've been hearing a lot of good stuff about John Fedro's products, so I'll definitely take a look at those!

@Brian Mathews - I appreciate the heads up, will look those things up.

@Will Barnard - I hear you, in the fall I will be majoring in Real Estate, so that will help me when getting jobs in that nature. I appreciate the advice!

@Matt B. - It seems like these new regulations are really out to get the mobile home investors, so that's good to hear. With what little I've heard from John Fedro, he says the same about the 2k. I hear both sides (I need to save up/I should invest now) and will do my due diligence before deciding a path.

You all of helped tremendously, thank you for taking some time from your day to assist. Every comment was appreciated. I am already better educated and eager to read more. If I become a successful investor one day, I know I'll owe it to the BP community. Thank you!!!
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La Nae Duchesneau
Real Estate Investor · Sarasota, FL · Member since 2013 · 52 posts · 33 votes
12y
I make my living off of investing in mobile homes. I think it is a great way to get started in your real estate investing career. And Kudos to you for thinking and acting on it when you are so young.

You can buy a one bedroom that needs a lot of work for $500 in Florida, or about $1500-$2000 but it will probably still need $1000 in work. Your ROI is fantastic on mobiles compared to a single family home. You will make about $200 to $300 a month profit on a one bedroom. I rent a one bedroom for $595 a month, lot rent is $310. Saying that, you do need to have money in the bank for repairs and things like a fridge or stove that goes if you decide to provide them.

I would not start an investing career myself with $2000, but I'd say if you are ambitious and a believer, save $5000 so you have a cushion and go buy yourself a one bedroom mobile.

Nothing risked, nothing gained. Good Luck!
2 Reply
John FedroPro Member
Investor · Austin, TX · Member since 2009 · 413 posts · 295 votes
12y
Hi @Omar Naguib

Welcome to BP. Like everyone here I am glad to see that you are jumping into real estate investments so young. You likely have a long and exciting road ahead of you. With that said there are pitfalls to watch out for.

Concerning some of your questions it is vital to know what homes will resell for in your area, not just think you know but really be sure of what prices and/or terms they will sell for. Concerning renting or selling this will come down to your style and end goals, real estate investing a smorgasbord of options that you can pick and choose from. Talk with as many investors and you can pick and choose what you like about their businesses.

Will and Chris make good points that $2,000 is not a lot of money to get started with. Is it possible to move forward with this amount of money and a boat-load of determination, yes. However you will have much quicker success with just triple that amount of money, with regards to Mh investing anyway.

Keep up the education and use this forum for more questions and help.

Thanks for the love @Sam Parkins

All the best and talk soon,

John Fedro
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Omar NaguibPro Member
OP
Amarillo, TX · Member since 2014 · 28 posts · 6 votes
12y
@La Nae Duchesneau - Thank you for the feedback! That quells my worries a little bit. I'm still deciding whether or not to save a bit more, but I will take your advice into account! Thanks again.

@John Fedro - Thanks for the post! Understood. I'll make sure to visit all of the parks I can to see how they're selling and at what price. I'll take this advice into account when creating my plan.

Thanks guys! Every post here will help with my decision. I appreciate the assistance!

Omar Naguib
0 Reply
Bobby R.
Investor · Bowie, MD · Member since 2011 · 49 posts · 5 votes
12y
La Nae Duchesneau , do you have a purchase contract for a FL MH? I'm going to meet w a seller later this AM. Never bought a MH, looking to wholesale it. Thank you Bobby
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La Nae Duchesneau
Real Estate Investor · Sarasota, FL · Member since 2013 · 52 posts · 33 votes
12y
So far I have only bought mobiles and rented them out. However, I am about to sell my first mobile using owner financing. I am thinking of $500 down, 12% interest, and then I will give them the payment options for 3,4 and 5 years and let them choose. I haven't run my numbers yet as this is one of my existing mobiles and they are moving out next week.
The difference between my renting the unit and making $255 a month vs. lease to own is I still will make the $255 per month but with lease to own I have no repair issues. No one calling me at 8 at night on a Saturday saying their fridge is not working, the roof is leaking, the toilet is backing up....
Now after 3 years I will lose this income when they pay this property off, however, if I want to I can buy another one to replace this income I can do so at the time.
I created the paperwork for the lease to own by simply copying the applicable forms in the back of Lonnie Scruggs book. I may have tweaked a few things so it covers my personal concerns.
1 Reply
Aaron Kinney
Real Estate Investor · Lexington, SC · Member since 2012 · 25 posts · 11 votes
12y
Hey @Omar Naguib ,

That's great about getting into mobile home investing. I'm on the mobile home and land side myself but started with just mobile homes. I have three pieces of advice for you:

1. Educate yourself as much as you can. BP is a great place to do that. Check out a bunch of the books on Amazon related to mobile home investing. John's MobileHomeInvesting.net and Rachel's AdventuresInMobileHomes.com are great resources as well.

2. Evaluate your financial condition. I'm not just talking about how much money you have in the bank but also what is your borrowing power. I know that you're young so your credit is new but work to build that score up. And if you can make a little money in college with some W-2 income, you might be able to borrow money on personal lines of credit at your bank to be able to help finance that first deal.

Also, check with any of your close relationships (friends and family) and see if they would be interested investing with you.

3. Get started as soon as you can. One of the biggest regrets from established real estate investors is that they didn't start investing sooner.

I started investing when I was 21 but wish I could have started even sooner.
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