Mobile home benefits
I was curious about mobile homes, but my knowledge of them is practically nonexistent. Could someone explain to me the benefits of mobile homes vs other investments?
#4 Mobile Home Park Investing Contributor
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- Springfield, IL
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#4 Mobile Home Park Investing Contributor
- Specialist
- Springfield, IL
The real benefit is in owning manufactured housing communities as opposed to owning other types of commercial real estate. Properly purchased and managed, land-lease communities return double the profits one might expect from apartment buildings.
For operators large enough, owning communities also offers access to prospective borrowers for a captive finance company that can, despite all the new regulations on lenders, add an even larger profit stream than the communities.
Both offer interesting tax advantages as well.
All of the above pre supposes that the operator knows what they are doing and is willing to work hard to make it happen. If you are really interested, first talk to Frank & Dave about their mobile home boot camp.
Mobile home and mobile home park investing are great ways to get cash flow with minimum cash investment. On the other hand, sizable time investment is needed to maintain the cash flow, and the people who rent and own mobile homes often have little capital in the mobile homes. I invested in a mobile home and have learned lots over time. One strategy that got me interested was from an investor who bought used mobile homes for about $2,000 and rented them out for a positive cash flow from the start.
I own and live in an 1100 sq. ft. 3 BR 2 bath, doublewide mobile home now. If you buy them right and maintain them, they can be as good as a sight built home. I paid $13k for a lightly used mobile home that probably cost well over $50k new. You can get into mobile homes very inexpensively but watch out for cost of moving and setup. It can be costly. By the time we moved our home, lot prep, put in a septic system, built decks and porches and had all the plumbing and electrical connections made, our total cost was closer to $25K...still cheap for any kind of home.
We I own a small mobile home park and all the homes in it. We can buy a home for $5000 and rent it for $485 per month. You cant beat that return, if you are willing to deal with the mobile home renter and put in the time!
Originally posted by @Kathy Miller:
We I own a small mobile home park and all the homes in it. We can buy a home for $5000 and rent it for $485 per month. You cant beat that return, if you are willing to deal with the mobile home renter and put in the time!
Hi Kathy, Thanks for your post. I like the idea of having a small mobile home park and buying $5,000 mobile home to rent at $485 monthly. Please give me some tips on how to buy and set up a small mobile home park. I live in the KC area. Thanks! [email protected]
@Lee Schaeffer
First you have to determine if mobile home parks are allowed in your area. Many cities have zoning limitations against them. Finding an area that allows a MHP and has access to city water and sewer is ideal. Existing parks like this sell for $400,000 and up, depending on size and market. We were able to buy a 7 acre parcel that had city water and septics set up for single-family houses. The seller lost his financing so we got a deal. The land had once been a mobile home park so the zoning was already in place. We started putting in homes and renting them. So far we have 9 and they are always full. Cash flows like crazy!
@Frank Jones so the 25k was your move setup and connection cost on top of the purchase price, or was that including the purchase price?
The $25K was the doublewide manufactured home including all set up cost. The manufactured home by its self was $13K so the "extras" were about $12K. These included lot prep, septic tank, electrical and water connections, simple porches and steps, foundation skirting, etc.
Hi @Kathy Miller, could you please give an update to the park you mentioned in this post as it has been 4 years. At the time of posting you had 9 units, how many now and how many is it possible to get on a 7 acre parcel? Is running the park a full time job for you guys or do you have a manager?
I appologize for all the questions, I have a real interest in investing in a park.
Hello, I would be happy to answer any questions you may have. The first thing you need to know is if there are any restrictions in your area against a mobile home park. Building one from scratch can prove to be both difficult and expensive.
As for my story...The parcel we own had been a mobile home park previously. It had septic systems and city water lines for 8 homes. At that time, the state water management authority allowed 2 homes to share a tank if they were on the same parcel. The septic permit determines the minimum area required for each system and for our 7 acre parcel that is 6 systems, therefore we can and do, have a total of 12 homes. Yours will vary depending on the site soil conditions and legal requirements in your state.
We removed the old trailers and brought in newer ones. The average cost was about $5000 per singlewide and $10,000 per doublewide. We currently manage the park ourselves and do most of the maintenance. When we travel, the tenants deposit their rents directly into my checking account and text me a copy of their receipt. Some months we just collect rents; $500 for 3 bedrooms and $400 for 2 bedrooms. When something breaks, we have several local handymen we can call to make repairs.
In our area, there is so much demand for quality rentals at an affordable price, we rarely have a vacancy. When we do, I advertise on Facebook and get 10 or so responses quickly. We have a 2-page application and require a 6 month lease. I do my own reference and credit checks; the best qualified candidate wins!
@Kathy Miller great little setup that you have there. Sounds like it works great for you guys so that is great.