Buy and Hold Mobile Home Investors: Are you out there, and are you successful?

78 Replies

Hey BP community,

Are there any satisfied buy and hold mobile home investors out there? Why does this niche seem so uninhabited? 

With $50K cash, we recently purchased and rehabbed 6 mobile homes, five of which are in a park, and 1 is on land. After bringing in a thick skinned property manager, we've got all of the fully rehabbed units rented and are loving the cash flow. Two are still being rehabbed. My lot rent averages $220/month, and the rents are $700.  

Compared to my other investments, (single family, SFR section 8), I do sacrifice long term appreciation with mobile homes, and banks won't even think of financing them. Other than that, if you can feel comfortable in this space, it's pretty lucrative.

Since I've heard so many negative points of view on buy and hold mobile home investing, I would love to meet and hear other opinions to the contrary. Is there anybody out there?

Best,

Mike Gennaro                                                                                                                        

Honest Leasing LLC.

225-931-3111

@Ron Garic , @Damon Armstrong  

Hey Mike,

I'm doing this with travel trailers. We have similar cash flow on them.

I've only been at it for 3 months, so can't say how well it will go long term.

I'm part owner in 6 right now, with 1 being rehabbed.

Hey Leslie,

Are you buying travel trailers in parks, or do you own the park where they are located? If so, has it been easy to rent them out and manage the tenant transitions? Length of tenancy? Please tell me more, lol!

I think we've talked before. I'm glad to hear it's going well in the travel trailer niche. My venture into MH investing stemmed from my research into serving the influx of oil field housing needed in our local area here in south eastern Louisiana. 

Best,

Mike Gennaro

Mike,

Yes, we've talked before.  I forgot exactly what about, but I think I'll look it up.  We also have a lot of plant workers coming into our area, plus apparently, we have a strong market for rentals in general.

Mine are all located in parks that we have to pay lot rent on.  We're working on developing our own RV park, but not sure if we'll be successful.  We pay $260 for lot rent, with rents between $650-$780. 

We do weekly rents with 6 month leases.  I'm not sure how long the renters will stay, but we have security deposits to try to keep things long-term.  We chose weekly rent because we can get a lot more money that way.  It is more hassle, so I don't know if I'll like it in the long run.

Why is the MH rental niche uninhabited?  I'd say that it's not.  There are tons of parks that have rentals in them.  Those owners just aren't on forums, I think. 

Of course, some have tried it and didn't like it, and there are those that would criticize landlording in general.  And, of course, most RE investors look down on MHs.  I think the ones who are open to them may be the people who have actually lived in one and discovered they're not that bad! :)

Over on the CRE website, there were several people who focused on MH rentals and felt they were profitable and worthwhile. They've closed that MH forum, but the archives can still be read.

It seems that most MH investors in the past tended to do Lonnie Deals - owner financing rather than renting them out, to avoid maintenance issues.  With Dodd-Frank and the SAFE Act, it's not being done as much anymore.  It's the reason I decided to do rentals.

I have single family homes and mobile home rentals. If I had bought just mobile homes from the get go I'd be in a lot better shape! That being said, I rent mobiles and I love this market. The ROI is phenomenal. You will retire young my friend.!

OK. You guys have my interest. I'm pretty uninformed about mobile homes but i am starting to get more curious. 

 There are a lot of mobile homes around my neck of the woods on 1 to 5 acres and they sell with the land for up to $100,000. Rents for 800 to 1000 aren't very impressive.  I've ruled out these type of investment unless you hoping the land will appreciate. 

There aren't really any mobile home parks close that I know of.

But there is this neighborhood with 5000 sq ft lots that have MH and some older built regular homes.  I'm assuming county utilities.  Kind of an eye sore of a neighborhood.  I think you can buy a lot for 5 to 10,000. I'm thinking there could be some money made on an owner finance deal in there. Rentals scare me. I have a friend that owns a park out in lampasses( I think) and he has a full time MX guy that works for him keeping those things livable.

Does anyone here do mobile homes NOT in a park? 

Thank you all for your responses. I think @Leslie A. is correct in that maybe buy and hold mobile investors are not quite as strongly represented on the forums. That being said, it is great to have a support group for this kind of investing, and I look forward to reaching out to you all in the future.

Best,

Mike Gennaro

@Mike Gennaro Yeah I think there are some people out there doing it but maybe you don't here about them. I am just getting into mobile homes as well. Mainly because the numbers for SFR just don't come close to making it really and we actually have tons of mobile homes in this little town Im in. Finding a decent park that accepts rentals is another challenge as well. My thought was also the lower investment involved in the mobile homes and the rental returns are way more that SFR around here. My lots rents are in the low 200's and rents on the 16x80's should be in the 700-800 range. I think another downside is the renters you get can be more of a challenge as well in mobile homes. The one mobile home I bought was a steal granted it needed alot of work but in the end it will be well worth it. I think I could flip it and make $15K easy but if I rent it I could make that in a 1.5-2yrs and then the years after are even better. So we will see how it goes. I think the key is to not invest a ton into them, under 15-20K, sometimes under 5K as well.

Hey @Mike Landry  ,

I do have one mobile home that is not in a park. We had a renter that signed with us before we even begun renovations. Low income rentals on land are hard to come by, and are very much in demand. Think about how the majority of low income properties are in overcrowded areas that were poorly planned out. You are right that one perk to buying mobile's on land is that the city sprawls out into the country eventually, and appreciation occurs. Flipping seems like a great plan too, but I have always followed Robert Kiyosaki's advice not to flip, but to buy, hold, and refinance.

If you are curious, the basics of our deal was that we bought a 76' trailer on one acre of land for $1000 plus closing costs. I bought it from a guy that couldn't keep up the property any more and was willing to take next to nothing to be done with it. His x-wife technically owned half, but she left town years ago ago and has never contributed to paying property taxes or upkeep. Our plan is to sue her to quiet title if she ever shows up. We're putting about $15K into our renovations, because the property is going to be a long term rental.

To address your point about the challenging tenant base, I was getting lied to left and right when I first bought my mobiles, so I found the toughest property manager I could. She has been an absolute life saver, and she is worth every bit of the 10% of rent that I pay her. There is enough money to go around in this niche, so I suggest property management if you can find it. It has allowed me to focus more on acquiring more properties and doing what I'm good at, finding new deals and managing rehab crews.

It's so good to see all of the interest in this topic. 

@Mark Gruetzmacher   

To address your point about the challenging tenant base, I was getting lied to left and right when I first bought my mobiles, so I found the toughest property manager I could. She has been an absolute life saver, and she is worth every bit of the 10% of rent that I pay her. There is enough money to go around in this niche, so I suggest property management if you can find it. It has allowed me to focus more on acquiring more properties and doing what I'm good at, finding new deals and managing rehab crews.

have you read "Mobile Home Wealth"?  It has quite a bit about rentals

My wife and I bought a mobile home last fall and put it on a vacant lot that came next two one of our Duplex.  We paid $6000 for a 3/2 double wide and spent another $12,000 in hookups.  It rents for $800 a month and so far this year has made $7231 after all expenses. 

It is easy to rent and we have only had 1 tenant so far.   Over all good experience. 

@Leslie A. 

I have read Mobile Home Wealth, and I consider it the most useful read so far concerning rentals. Due to the cover graphic, I was a little worried it might have been outdated, but the info contained in it still holds true. I also read Trailer Cash, but I have to give that one two out of four stars. 

@Mike Gennaro Yes, there definitely are mobile home investors out there. Though, for the most part the successful ones I know of are occasionally online. I have heard there are mobile home groups who meet around the country. Usually, they are affiliated with the local REIA and represent a smaller segment. Hope this helps!

Thanks @Rachel H. ,

How long have you invested in this space? Did I see on another thread that you are an author as well?

Best,

Mike

I'm currently reading this book and will be pursuing a buy and hold strategy very soon!

Do you have any suggestions for best places to find inexpensive homes for the first few deals - maybe 5k and under? I feel Craigslist may be too obvious....

I have two doublewides and an old singlewide all on land that are very good buy and hold properties.  The doublewides rent for $950 and $850 to blue collar type people.  The singlewide rents for $650 to a young guy that is a truck driver with a side business gunsmithing.  My parents have three doublewides on land and my aunt another one.  The key is buying them right.  We have from $35k to 45k in any of the properties.  The big issue with them is as mentioned above you are doing all cash deals since it is pretty much impossible to get financing on a mobile home for investment purposes.  They are great for cash flow, but sow to expand with.  This is one reason I am looking at adding a few standard stick built homes that I can get financed.  I am not sure I want to do al the hassles of getting licensed as a mobile home dealer and worry about the DF and SAFE Act regs to do flips and Lonnie deals.

Mike, how did you find a mobile home property manager? How many places did you have to call? 

I only have one rental in a park right now, but I am not joking when I say if I could buy 40 more like it I would. The ROI is amazing.

I'm certainly no expert but do have a DW on 6 acres.  We lived in it for 3 years, then decided to rent it out when we moved north.  We put about $20K in it (a '76 commodore) and have been renting it out for $1150.  We hire a management company to find tenants and do all the paperwork.  Once we have the tenants, we take over the management.  This has worked well for us for the past 2 years.  The house has few needs since we renovated it but the land has taken some work with drainage issues and putting in a large retaining wall.

I've been looking for other rental properties but haven't found anything that makes sense financially yet.  I've contemplated MH rentals and will look more closely at it.  We've been quite pleased with our first.

@Eric F.  , we are just using a property manager.  They don't specialize in MHs but do them.

Sure thing @Mike Gennaro  . I've been in the business for well over a decade. Seen a lot of management changes working with park managers/owners and I can honestly say, I'm still in the game. 

Some have had negative experiences when new management is put in place when working in parks. Though, I think establishing relationships and building rapport is more of an art than an exact science. 

Regarding your second question, yes - I've been writing for quite some time. :) 

@Mike Gennaro  

  Rachel H. has a book called "Adventures in Mobile Homes" plus an excellent blog called Adventures in Mobile Homes.  I especially enjoy reading the case studies.

To Brad Richard, How do you find deals under $5000? First you have to call the parks and ask them a few questions-

Do you allow rentals in your park?

How much is your lot rent?

Is this an all age park?

Do you have any for sale?

You need to be sure the park allows rentals first and foremost. Then you want to see what their lot rent is, you want to be sure you can make a profit with what you plan to charge for rent. If you do not make a minimum of $200 I would pass. But profit margin is up to you of course. You want to see if it is an all age park versus a 55+ park. I like all age parks because it is easier to find tenants. Why limit yourself to the 55+. Again, this is up to you though.

Lastly see if the park manager has any units for sale. Whether they do or do not, once you have your 1 to 3 parks that would meet your criteria to invest in, I suggest you drive through the park and write down phone numbers of people who have for sale signs in the window of their mobile.

Thanks La Nae! I will apply your tips and see what progress I can make.

@Eric F.  

We found our amazing property manager through another investor. We meet our local investor colleagues through our area REIA's and through talking to various people we meet about investing. I use two property managers, one for my Section 8's and one for mobiles. You may need to call around, but most property managers just want to know how much rent you will be receiving so they can figure out how much they will receive.

When we had 6 mobiles on our hands, four vacancies and two existing tenants that were really challenging to collect from, we offered our property manager bonuses to fill vacancies and put the squeeze on existing tenants. She went right to work, and we've never looked back. It was well worth the extra money to incentivize our manager to put in the extra work to get us up and running. 

I mention this to help you nudge any potential property managers to take on your MH portfolio. It will certainly take them extra work, so pay them well. There is so much money to be made that a couple more percentage points awarded for good management won't hurt.

@Brad Richard  Craigslist is a legitimate resource and obvious choice for higher income sellers. However, if you were selling your home for $5K or below, would you have the internet in this home or even on your phone in order to list on Craigslist? I'll list my favorite lead sources below and the deals that came from them:

Craigslist: We bought three MH's for $8500 each from an overwhelmed investor.

Park Manager: One MH in bad shape with a decent exterior for $1500. The park is my favorite one, featuring a vibrant community of tenants and owners. This MH needs about $10K of work.

Through my wife, a realtor: For $1000, we bought a beat up 76' trailer on one acre of land. We now co-own the place with the seller's x-wife, who skipped town a few years ago and has never paid taxes on the property. Our attorney advised us to sue her for complete ownership after we've owned the place for three years and paid the property taxes all by ourselves. We rehabbed the unit for around $12K and have a tenant in place paying $700.

Newspaper Ad: We bought a 93' 3/1 in excellent condition for $7500. It was originally listed for $10K. We had to move it for $2500.

So in our case, it has taken nearly $10k to set up each trailer. I think it is quite difficult to find a trailer in decent condition in the place you want it for $5000. This is only because I haven't done it yet.

@John Fedro  has done it several times and he has really proved to be a first class source of answers and encouragement as we set up shop. Although he uses a different exit strategy and prefers not to buy and hold, his podcast #75 on BP is still very helpful.

Best,

Mike Gennaro

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