any mobile home landlords out there????

40 Replies

Hey Everybody,

Up to this point my real estate investing has been mostly buying, rehabbing, and selling for profit.  I have kicked around the idea of buying individual mobile homes on their own land and using them as rentals.  I am not interested in a trailer park, but individual homes.  In my area you can get a bank owned double wide 2000 or newer on 3/4 acre lot in decent area for 25k pretty often.  I figured with some improvements and appliances that I would have on avg 30-32k invested, and the 3-4 br models rent out for 650-850 depending on size, etc.  Taxes and insurance are cheap too.  I do realize that the mobile home loses value, but the rental income it would be able to pay for itself in 4-5 years.  Any thoughts on this?  I don't want headache tenants (no landlord would), and I was hoping that if I bought a nicer unit in a decent area, that I could find better tenants, and ofcourse charge a higher rent.  Thanks in advance for your input. 

Adam

@Adam Drummond    I think it's a great plan. I rent travel trailers in a park and my renters are awesome. I've had a great experience with them

"Deals on Wheels". By Lonnie Sinclair

might have hard time to refinance/cash out some day  if you have to

I do own a 89 3/2 double wide on its own land. It has been the BEST rental we have to date.  Wa also own duplex from the 40s and a duplex from the 30s.  And matnence and repairs have been much simpler and cheaper in the mobile... If I had newer duplexes it might be a different story. 

We paid 6,000 for the mobile, moved it onto our vacant lot next to the duplex and paid to have all utilities hooked up. Total investment was $17,800. Just had a CMA done on it it it came out at $62,500. It rents for $775 a month.

Will this mobile lose value over the years?  Sure, but it has a long way to go before I lose money... In fact I with rental income I won't lose money. I will have all my money back that in invested in 14 more months.     Don't let people discourage you just because it's a "mobile home".  These CAN be good investments... Not always 

@Ricardo S.  I just did a cash out refi on ours to buy the the last duplex we bought. Lenders did not give us any trouble. 

@Joseph Ball  I have never read "Deals on wheels" but m understanding of it is that he teaches how to buy low and sell on payments.  

Does he talk about Buy and Hold Mobile homes in that Book? If so i might have to take a look. 

He teaches buy and hold. Just buy it.

Thanks everyone for the quick responses and ideas.  @Joseph Ball I will check that boo out, and see what good info I can find.  Ricardo, I thought about that too.  I'd pay cash for the mobile home to avoid any payment.  I figured if 5-10 years later, I wanted to get rid of them that I could sell it cheap and still have the rental income that I have netted ove the years. 

-Joshua Daniels,

what you're talking about with moving a used mobile home to a lot is something I have thght about too.  Some of these homes are on over an acre, and I would split the lot up to accommodate another septic and water tap for a 2nd mobile home.  It seems that buying a used mobile home is more expensive than I thought though.  I was under the impression that I could be a newer single or double that was in decent shape for 10k or less, and from what I have seen on craigslist and other sites, that is too cheap.  Sounds like you have a small cash cow with your set up. 

Also, I know that I can make good cash flow with doing this.  My concern is that I do not want trouble tenants, and I don't know how picky I can be with selecting tenants for mobile homes (even if they're in nice shape).  I use to own a triplex near a university and I was able to be super picky about my tenants (no smoking, partying, references, etc), and it worked out well for me. 

Leslie,

thanks for the encouragement, and for sharing your thoughts on the subject.  

@Adam Drummond  

I have a couple of mobile homes on land in my portfolio and they are cash cows.  Tenants are great and typically want the land to be left alone so they do not bother me with the little things.  Rents range from $600 to 900 in my area.  Taxes are extremely low as well.  I also just owner financed my first mobile a couple months ago.  Pic is of my very first mobile home (built in 1981) which I purchased for $12K but put $30K in rehab.  MH needed everything including new HVAC and Aerobic System.  This home leases for $900/month.  I say if you can purchase one for $30-35K and lease for $650-850 then do the deal.

 

A great book on buy and hold mobile home rentals is "Mobile Home Wealth".   

@Rocky V

You put a lot of work into that one.. you seem to get great rent though.  I am not looking to do real extensive repairs, even if it means paying a little more for the home.   Here is a link to one that I am going to go look at:       

https://www.homesteps.com/address/104-Bradford-Ct-Easley-SC-29640/43950038_lid

i'd say if I got that in the mid 20's (haven't looked at it in person yet though) then rent it for 675-750 per month, i'd do it. 

@Leslie A

Thanks for the recommendation.  I will have to look into that one and also "deals on wheels" as mentioned in a prev post.

@Adam Drummond  That place looks pretty decent.  If I had stuff like that out here by me for those prices I would be buying all day long.  Seriously out here singles cost that much.  They just sold a 97 16x80 in a park for $31K about a month ago.  Decent places out here rent for 700-800 for singles, doubles are more the 800-1100 I think.  If on land maybe bring a bit more.  I am kind of in the same thinking as you.  Buy something decent and rent out for awhile.  Have it paid for in short time and then the rest is clear to fund something else.  Tenants will always be tenants, some are great while other are horrid.  I think no matter what type of rental you have you will get that.  Maybe a little more so with mobile homes because it maybe attracts the lower class tenants.  But that doesn't mean you can't have some great tenants in mobile homes as well.  I think it all leads back to screening in some ways as well.  Let us know what it looked like if you go see it.  Take Care.

@Mark Gruetzmacher  

Hey Mark,

I am a Realtor myself and called to make the apt to go check it out, and it was already under contract.  I am currently looking for another deal similar to this one.  A few months ago before I sold my last rehab I saw a few deals like this, but wasn't able to act on anything.  Of course, now that I am ready to make a move....crickets lol.  I noticed you were from S. Dakota.  I spoke to a local builder a couple years ago, and he was purchasing lots in S. Dakota and building there (even though he was from s. Carolina).  He said that the oil business was creating a boom up there.  Hopefully I will find something that will work out for me before too long. 

Adam

@Adam Drummond  Yeah seems like deal come and go real fast if they are good.  Not much for the oil boom here in South Dakota.  North Dakota is going like crazy though.  Everything up there is going crazy though.  Crime is huge and rent prices are some of the highest in the county.  Not sure I would want to but up in that county.  McD's pay like $15 and hour and I have even seen jobs driving basic water trucks for something in the 25-35/hr rate.  But people go where the money is and in turn brings everything else along with it.

Just be careful should you ever want to refi an MH on a resident owned lot/parcel. If the home was built before June 15, 1976 or if it doesn't have a foundation and engineered certification  you will have a tough time getting a conventional FHA guaranteed loan.

If you're paying cash and plan to just use it as a rental then you're probably OK. But if and when you go to sell it and the buyer wants an FHA loan that's where you'll run into a stumbling block.

Also if the home has been moved from its original situs and relocated to a private lot/parcel you will not be able to obtain an FHA guaranteed loan. Again, it may not matter to you but it could impact your ability to resell it down the road unless you're dealing with a cash buyer or plan to carry the paper instead of revisiting your capital which isn't a bad way to go if you have Bigger Pockets (pun intended)

I  purchased a mobile home on land and it has worked out quite well. I bought it as a buy-and-hold,a so re-financing not significant issue. 

Here is how the money crunches;

Financing; was harder, and I ended up with a private loan (no bank was loaning on ANYTHING in Aug of 2010 anyhow though, and I got an 8% loan - extremely fortunate). The house was newer ('87) and needed dramatic but simple repairs (100sq ft of subfloor, 1200sq ft of flooring materials, 80 linear feet of drywall, plus paint & light fixtures).

Rent - Less per sq ft BUT you get 2x the sq ft for the price. I'm getting a bit over 1% per month, which for CA is exceptional. In my case the ROI is the same as if I had bought a smaller 50 year old stickbuilt, but it's easier to rent a newer 1850sq ft 3/3 than a 900 ft 2/1. I am running about $100/mos under top market rent, but I am extremely picky about tenants (it's in the poorest county in California , and 80% of the renters in the area I won't consider). If a home is CLEAN and SAFE it is rentable. The nicer it is the easier it is to get good tenants. You wouldn't have mud driveways, doors with holes, or filthy carpet in your stickbuilt, so don't figure they are OK for your Mobile.

Insurance and Property Tax - based on the purchase price, so dirt cheap for the size of house. 

Maintenance - Routine maintenance is similar (water heaters, roof, etc are all the same), BUT more damage occurs in a mobile if you neglect the maintenance. Preventative maintenance is the key - keep the house painted, replace the hot water heater before it rusts out, replace the roof when it's old, not when it starts to leak. Make sure the Belly band is kept caulked to avoid leaks. Keep your gutters clear and in good repair.

HINT: the biggest thing that screams "mobile home" is a bad skirt around the base. Doing a top-notch job on the fit and finish of the skirt or foundation goes a long way toward curb appeal. Also use NICE porch lights and outdoor fixtures. Skip the Astroturf on the deck. There are so few "ornaments" on the outside of a mobile that everything counts. Don't skimp by using the $8 porch light if you can find a nice-looking one for $35.

Ps - if you can chose flooring that makes the house kid and pet-proof you can often get a better caliber tenant (many landlords won't accept animals, while many higher income renters aren't willing to give up their pets). Get vinyl plank flooring throughout and you aren't risking $5k of new carpet to someone's piddling pup. Still get a pet deposit.

Quite honestly ALL houses are just a box of air. Stick-built, mobile, RV, McMansion, castle whatever. As long as you can make it waterproof, weatherproof, and the plumbing works you can rent it to someone. The larger and more appealing it is the more you can rent it for and the pickier you can be about tenants. (MySmartMove. Best. Thing. Ever!!!!)

Another good option I've done on a few of my mobile homes is lease option or seller finance to purchase - that way you get a tenant buyer in there who takes good care of it and it gives them an incentive since they're buying it, while you're still receiving monthly positive cash flow as long as it's structured right. I try to buy low and sell high with a low down payment and 8%
interest.

@Adam Drummond  

I've stopped going after deals on MLS due to other investors over bidding and now primarily buy at Trustee Sales. You may consider this just make sure to do your homework before buying and always drive by the property before bidding. In the area I'm concentrating on you can get a mobile on 1 acre for $20-35K.

we have 2 mfh (99, and an 86) 3/2 1100-1400 sq ft, and they are cash cows even after the city required sidewalks and aprons, extra foundation stuff, etc.  We love our mfhs.  We also live in one.

I own several MH rentals and am always looking for good deals. However, the land in SoCal is too expensive even with MH's on them to realize any greater ROI than you'd get from a Sticky Built. So I only buy in MH Parks where the park owner/managers will allow sub letting. I think this may get a little easier as rumor has it that MH park owners can no longer not allow sub-leasing. Anyone know anything about this? Hmm, maybe a good question to ask on this forum.

GREAT thinking. I own a nice portfolio of mobile homes on private property -SFR- as rentals. I made the cash necessary to buy outright by flipping mobile home in mobile home parks.

The mobile homes only cost half of what stick built homes of the same square footage go for, BUT, I get 85% to 90% of the same rent as the stick builts. Easy math.

When I'm tired of being a landlord I'll sell on contract - which I've already started to do. TWO big points 1) Landlord - great business if you have the right attitude and treat it like a business. Join the best landlord association you can. The one I belong to here in WA makes the business a lot easier. 2) Sell on contract. Works just fine. Don't be afraid of the Dodd-Frank act or similar hoops. It probably won't apply and even if it would about $1,000 will cover the fees necessary to pay qualified individuals to set it up for you. 

It seems many folks suffer from knee jerk reactions to every challenge that comes down the pike. Don't fall into that trap! 

Originally posted by @Jerry Lucker :

GREAT thinking. I own a nice portfolio of mobile homes on private property -SFR- as rentals. I made the cash necessary to buy outright by flipping mobile home in mobile home parks.

The mobile homes only cost half of what stick built homes of the same square footage go for, BUT, I get 85% to 90% of the same rent as the stick builts. Easy math.

When I'm tired of being a landlord I'll sell on contract - which I've already started to do. TWO big points 1) Landlord - great business if you have the right attitude and treat it like a business. Join the best landlord association you can. The one I belong to here in WA makes the business a lot easier. 2) Sell on contract. Works just fine. Don't be afraid of the Dodd-Frank act or similar hoops. It probably won't apply and even if it would about $1,000 will cover the fees necessary to pay qualified individuals to set it up for you. 

It seems many folks suffer from knee jerk reactions to every challenge that comes down the pike. Don't fall into that trap! 

Good points Jerry. I have financed several mobile homes also. I found a local MLO person to do the paperwork required by Dodd Frank rules to stay legal. $1000 would be high. There are only 3 pieces of paper involved. People can ask at their local REIA and I'm sure they can find someone local to them.

Hmm....................Interesting.

@Bill Neves  How do you find a MLO.  Where do you start and what do you ask when looking for such a person?

As mentioned, I found one at the local REIA meeting. Asked who did loans. Got a name and met with her offline. Told her what I was doing and asked what it would take to do the required paperwork.