Mobile home investing

32 Replies

I've never given much thought to mobile home investing. Heard too much about them getting wrecked in hurricanes, floods, tornados, and everything else. That aside, has anyone had any experience with them?
How exactly could you make money with one as an investor.

I think the biggest problem is that you'd be buying something that is going to go DOWN in value. If you got the place for almost nothing, and if you owned the land (and if you had no other use for the land), and if you could keep it rented to steady reliable tenants. See, too many ifs there to do anything with.

A couple of times I've had Realtors try to interest me in buying small mobile home parks, if you can buy them right they can be CASH COWS. Recently an agent told me that it costs about $15K-$17K per space to develop a small park. So, if you had some land and could put in the sewer/septic fairly cheap it might be something to look at.

The ones that I looked at had a simple deed restriction in the space leases that the owners could not rent out their mobiles, without the land owner's permission, which is never given. So when people decide to move up they find that it's real expensive to get the mobile moved, and the market for used ones is almost non-existent. So the owner of the park buys the trailer for pennies on the dollar, and then THEY CAN RENT IT OUT. Pretty neat huh. The returns on the ones I looked at were pretty good but I just couldn't interest myself in that end of the market.

all cash

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I'll check it out Gordo, more out of curiousity than personal interest though. I'm in my mid 50s and don't like the idea of being tied to one geographical area. Also from what I've seen they're more maintenance intensive than stick built houses, and let's face it, they do decline in value. Although there might be some locals, Palm Springs California maybe, where they hold there value.

all cash

If it costs $15k-$17k per spot to develop a spot, what kind of return will this likely bring in? You say it's a cash cow business. There must be some sort of good returns to be had, right?

Gordo, thanks for the tip. Looks like Lonnie Scruggs is the man when it comes to mobile homes. I'll try and pick up one of his books. Thanks to everyone else for the feedback. I'm also curious about how much of a "cash cow" these parks can be. How long does it take to expect a return?

Here's another arrow for your quiver.

Mobile Home Investing by Mark Walters

Happy Investing!

8)

I think mobile home I think 2 things, low income and retired folks. Both would be likely to run into money problems and may have a tough time paying the rent IMO. Does anyone that currently owns a park have issues with non-payment?

Hi,

The name's Corey. I've been in the cashflow business for 2 years now, and in the market for some more mobile home notes, real estate notes, annuities, structured settlements, commercial notes, and business notes. If anybody have any of these debt instuments on hand, I can provide a lumpsum of cash and take those bothersome notes of your hands.

Corey

Being unsure where individuals reside, from this board, I can tell you that mobile homes are NOT always for the lower income and the pensioners and are SOMETIMES a really GOOD investment, and here is the other way to look at it. I live in SC in a rural area, and nearly EVERYONE out here with 5 to 500 acres, starts out IN a mobile home. They purchase the land, have the well and septic put on, put a mobile home on it and they pay on it until it is paid off. At which time they either build a house and move the mobile home off, or they build AROUND the mobile home. Demographically speaking, most of these are couples in their low to mid 30s with mid range income, not lower income levels.

In Australia, there are a lot of mobile home parks that are used as holiday destinations by the traveling, and for stop over destinations whilst traveling through. There seems to be a happy medium in permanent residents and holiday users, especially if you are a member of one of the roadside assistance clubs that promotes your park as a preferred stopover.

In my area, mobile home lots rent out for $300+ per month and almost always the mobile home company finances all of the trailers out on it. And I believe the tenants also pay the taxes. But trailers (not the modular homes, they aren't build on a chasis - if they are put on land they appreciate very well) do decline in value and are typically tied to low-income individuals (even though that definitely is not the standard).

If the park is run well and you find good tenants, you can definitely make a lot of money in the business.

On Wednesday I bought a MH for $3500. On Monday I sold it for $9500 at 12.75% interest with $500 down, paying $426/month for 24 months. Total time investment equals 5 hours. Yield = 162%. They're not tenants, so I don't have to worry about maintenance. If they default, I can evict them as easily as if they were tenants (MHs are personal property, not RE, so easy to repossess).

Say they default after 6 payments. I made $500 (down) plus 2556 in payments. I've got all my money out of the deal, I made about $50, I can resell the home and collect another down payment.

This MH deal is going to cash flow more than most of my rental property. Its a great way to make short-term cash.

Where are you finding Mobile Homes for 3500$. Are they listed online? Is there an ad in the paper? I 've been looking around RE sites and I only come across mobile homes that people are trying to sell for 30K or more. Please tell me where you can find a MH for less than 5k that isn't about to disentigrate due to rust.

I find most of them by driving through local trailer parks. I also find them in the paper. I've developed relationships with MH park managers, and they refer me business all the time. I pay a manager $100 for a referral the results in my buying a home. Since the manager is the first to know when someone is moving out, i get lots of referrals.

Rbecklan, I have a question re logistics of your deals. Are you buying homes already in a park? If so, do you then pay the pad rental until you can resell?

Originally posted by "Resmith":
Rbecklan, I have a question re logistics of your deals. Are you buying homes already in a park? If so, do you then pay the pad rental until you can resell?

Yes, I buy homes in a park and pay the lot rent until they sell.

As noted earlier, check out Lonnie's book Deals on Wheels plus the later books. I have meet the man a few times. Real solid guy. Very experienced.

There are at least two people who have posted to the thread that seem to be doing Lonnie deals.

All housing goes down in value if you view it from the material point of view. Hence even stick built tends to wear out. The land tends to hold its value.

MH are inexpensive because they are easy to replace when they wear out. They also are easy to fix given the style of construction. With a MH you are creating streams of cash and are not looking to make your money from appreciation. If you want appreciation then look to a MH Park. Note a MHP is a commercial property so its value does not just rise with time. It is all based on the cash flow.

MHs let people start with little capital. You can do very well by them. Or you can just go to stick built homes and start there.

The largest MH builder and buyer of notes is Warren Buffett through one of his companies. It can not be all bad if Warren sees value.

John Corey

rbecklan:

I started out with a couple of mobile homes in the beginning of my real estate career when i was in my twentys. I do agree that it could be possible to do what you do and have some awesome returns but I had the following problems:
1) The mobile homes were in parks owned by others. The owners of these parks in my area (and i am good friends with many of them) do not want other parties or owners involved with there daily parks and business. They, the owners of the parks want to buy the mobile homes pennies on the dollar and either rent them or lease option them for a nice rate of return for themselves.
2) The owners of the park want to deal soley with the tennants or lease option tennants with out going through another party. Especially with tennant landlord problems dealing within the park.
3) The owners of the mobile home park have you in a "bad way". They have the say to who you lease option of sell your mobile home to. They have the final word to who you sell to. Thus, you must pay them lot rent of $200-300 a month until you find a buyer that they will allow to live in there park. Many prospective buyers will have bad credit and are risky ( that is why there dealing with you versus other lenders) making it very difficult for you to find the "perfect" tennant that the owner of the park will allow to live in there park.
4) Once you upset the owner of the park they will not allow anyone to purchase or live in your mobile home. Now you are paying them lot rent per month with no buyers. You cant move your mobile home out of the park normally because of issues (high prices for trucking, etc)and permits(size limits and new laws are always changing) to move them on the highways, other parks normally have guidelines of newer years of mobile home or larger sizes which are the newer mobile homes (normally not the ones you got the deal on) causing many problems.

Anyhow, with my experiences i sold my two mobile homes and began to buy two and three unit houses in my area.

Wendell Howard, Erie, Pa.

winn-- those are very real concerns... we've definitely seen that around here.

Seems like the key is to find mobile home parks with hired [i]managers/i] (and absentee owners 8)). Some of our parks here are basically owned by far away corporations and the managers are very agreeable if fairly treated.

Being in Central CA with a tight budget for investment, I have been able to search hundreds of MH in my price range. I haven't gotten my head wrapped around paying a mortgage/MH loan and lot rental at the same time. Now having a MH on land might not be bad. I wasn't thinking of the resale part....interesting concept.

Gary

in ontario , most smaller counties have by laws that MH do not fit the zoning bylaws . it is very difficult to find a location where you can have one of these units up here.

This is something we are jumping in on here in Washington State. Biggest hurdle I am seeing is that it looks like we are limited to three deals a year without getting a dealers license. Dammit!

If anyone else is up here in Washington, give me a shout. I would love to network and discuss business!

Just as a life rule of thumb (passed down from my Grandpa)...anything with tires you are going to have problems with. Really, just think about it.

What? Your second post and you are speaking negatively about an investing strategy that is very feasible?