Profitable?

Question

Is moible home investing profitable? Im just curious since i just mainly deal with single famialy homes and wanting to explore of way to make money with real estate? What kind of profit do you guys make?

John Fedro · Answer

Hi group,

Good point-blank question Kyle. Glad to hear you already have a good real estate business-head on your shoulders.

Everyone here has already given great insights, and I can only speak from personal experience in your area and working around the country so I hope this helps. Due to the low competition, high affordability, learning curve if investing solo, entry/exit strategy, sometimes risk mobile home investors take, and much more I always aim to double or triple my investment capital if reselling to an all-cash buyer or bank financed buyer concerning a mobile home on land or inside a park.

If I am selling using a legal payment-type selling method I will always aim to quadrupedal or more my investment capital over 5-10 years concerning mobile homes inside a park or more and longer with mobile homes on private land you will be owning as well. I hope this makes sense.

I suppose if you rent the homes out, which I do not do much of, then the profit can be much more substantial, but so isn't the headache in my book anyway.

As far as a cash-flow per month profit goes I suggest you aim for $300+ net to you, yes you can do skinnier deals all the time but set the bar high and sell a win-win deal that allows you to profit while keeping the buyer happy too.

There is much this comment did not address and perhaps opens more questions than it solves. If you have follow up thoughts or questions don't hesitate to comment below or reach out to me directly.

I hope this helps.

Thanks for the shout out Bill Neves. With all your experience you are my equal in my eyes.

Happy holidays,John  Fedro

Jeremy Tillotson · Answer

@Curt Smith I did some mobile home rentals very different and against the grain. We had a rental park of old 70's trailers, all the gurus and experts said to remove them and start over, it would have been between 10-15k each trailers to remove and move new one in. As a contractor I knew it wouldn't take much to redo one of these, so while the "paper value" wasn't there we completely redid them to look like nice homes (drywall real cabinets,vinyl windows, all plywood floors, and always a front door like would go on a nice house. and even sided some of them. We put 5-7k in these for a 550-650 month return. Since they were all redone maintenance wasn't bad, it did help it was in a desirable part of town, but got over 40% return on each deal. I think it goes to quality of work and knowing your market. As I mentioned on other post once you get to a certain size having employees (yes real employees) will save you over having contractors so that helped too.

BTW I just bought a mobile home this evening so yes mobile homes can still be done, maybe not the old way though.

BTW  I just bought a mobile home this evening so yes mobile homes can still be done, maybe not the old way though.

Joel Owens · Answer

I have never owned one. I know some of my friends own some parks. They seem to like it although they say yield has compressed the last few years on buying another one.

On the other side of the spectrum My mom's friend is in her late 70's and has been doing trailers for 40 plus years.

At one point they had a ton but now have about 30 I think. I haven't asked in awhile. I think personally she would be better selling out and just getting a Walgreens or something for estate planning.

Curt Smith · Answer

Hi Kyle,  I suggest reading the past few months of posts on mobile homes.   Lots of discussion re how Lonnie Deals are now a thing of the past, if not from Dodd Frank then certainly because most park managers have locked out investors.  You will have to drive your local parks and talk to the managers to verify.

We buy double wides on their own land, never on rented land in parks.  We buy with cash, $25k or +/-, rehab $5k to $10k, then market rent to own for 12 months then we owner finance the sale after 12 months.  The cap rate before and after the sale is between 25% and 30%.  I know of no other deal type that makes such good returns.  I'd never consider renting a mobile home, only rent to own.  Much higher quality of renter plus I get higher rent than the surrounding landlords just renting double wides.

Poor accounting is rife in the landlord industry.  So I don't believe that folks attempting to run a mobile home rental business make money when averaged over 5 yrs.  I know our model makes money!  30% leaves alot of slop and mis-accounting and still making money.

We never sell the notes because we are building a private retirement program.  :)

Rachel H. · Answer

Kyle D. As in any type of business, you can make money with anything. The key is finding out what works and what does not work for you. Usually, this can only be achieved through experience. What makes mobile home investing so attractive is the ability to get into a small deal with a smaller amount of money compared to other categories of real estate in general (i.e. single family homes, apartment buildings, etc.). From there you can gain the experience needed to continue with small deals and/or move on to larger ones. Best of luck!

John Lowe · Answer

The methodology of MH investing can vary tremendously by region. I'm not familiar with New Port Richey, but I can say from experience that MH investing in SE Florida is very different than GA. The investment is significantly higher, customers have greater financial resources, and the state regulations are stringent (ie. dealer license is required).

I don't know if this is applicable to you, but we've found that the yields that are achieved with MHs can be obtained with SFHs in working class neighborhoods in some urban areas. In 2015, we are going to apply the principles of Lonnie Deals to SFHs.

Jeremy Tillotson · Answer

@Curt Smith I dont compare it to be much different than low end properties with a lower entrance (much lower) point and actually slightly better tenants, that's just my 2 cents worth. While these are always cash deals its hard to tell people my kind of returns but its also lower numbers. Works great to build an IRA if you can avoid self dealing

Curt Smith · Answer

@Jeremy Tillotson

You're north of the Mason Dixon up there in Indiana.  Perhaps the most landlord friendly state in the country with 15 day evictions.   I hear that MH renters in WI, MN and you say IN pay their rent and don't wreck the place.  You can't do the same in the South.  One trick is to put in the lease that every home will be inspected every 3 months.  Give a repair costs schedule.  Any holes in the wall etc will be repaired and billed to the renter.  Word gets out and the holes and doors off their hinges stops.  But you have to have a strong park manager / or you have to be persistent at inspecting, fixing, and billing the renter.

Very good luck up there!!

Bill Neves · Answer

Mobile home investing is profitable.

Minus - As Curt above says you have to watch doing Lonnie deals. Lonnie Scruggs Deals on Wheels if you aren't familiar.

Plus - Repairs are inexpensive. No title usually. No realtor unless you want. Very smooth if you work it right.

There are lots of blog posts here. Check out John Fedro's posts. Very knowledgeable, has a training program and has been doing them for over 11 years. I'm just at 2 years.

Profitable?

Most Popular Reply