Trailers is as trailers does
Trailers is as trailers does
I’m a big fan of mobile homes. To me, they have the best returns, by far, of any investment in real estate today. But be aware, mobile homes are quirky.
We have a doublewide on Berry Bennett Rd. It was a little rough when we bought it, but we got it rehabbed and looking nice. We did all the normal stuff like painting, new floor covering and new lighting. But we also did some big ticket projects like putting on a metal roof, new plumbing and installing a four ton package unit.
In case you don’t know, a package unit is one of those huge outside AC units. When you see them, you probably think they’re way oversized for the house they’re sitting next to. For most houses, the air conditioner has two parts: the inside and an outside unit. The inside portion consists of a furnace and air handler, while the outside unit is a condenser. This is called a “split unit” because the furnace and the condenser are split into two parts.
A package unit, on the other hand, has both the furnace and the condenser all in one big outside unit. This makes them very efficient and also causes them to require less maintenance. Because of this, even with the slightly higher cost, a package unit is a great investment for a rental property.
Mobile homes don’t come from the factory with a package unit. They normally have a split unit that’s specifically designed to work with mobile homes.
The “Specifically designed” part brought with it a lesson we just learned the hard way. We thought we were doing a good thing by upgrading to that four ton package unit.
As it turned out, we were wrong.
Something you should know about mobile homes is that it’s best to buy an early 1990s unit or newer. The reason is that in the early 90s, they started using an OSB-type material for the subfloor.
Prior to that time, mobile homes were manufactured with particle board floors. This material is nothing more than sawdust and glue that when it gets wet, the floor begins to sag and fall apart. You’ll literally step right through the floor if you’re not careful.
The house on Berry Bennett happens to be an 86 model with particle board floors.
Also, mobile homes don’t use the same ductwork as regular houses. They have a trunk line made of sheet metal that runs down the center of the home.
When we put that brand-new package unit on those metal trunk lines and that ice cold air hit them, condensation formed on the lines like a cold coke on a hot day causing the subfloors to get wet.
The AC ran for months before the tenants noticed anything. By then, it was too late – the floors began to buckle, and then they fell through. We had to replace about 400 square feet of subfloor in the livingroom and bathroom. OUCH!
It wasn’t all the package units fault. The belly board had been cut (that’s the plastic that holds the insulation in under the trailer) for previous plumbing repairs. That gave way to lost insulation around the metal trunk lines which led to the condensation. Like I said, mobile homes are quirky.
Even with all this, the property is still a great deal. We’re all in on this doublewide on an acre for less than $30k, and it rents for $615 a month. If we keep it for nine years, that’s a return of 20.73 percent.
With returns like those, you’ll want to have some mobile homes in your portfolio. Just make sure you don’t over-upgrade. Sometimes you have to say, “Trailers is as a trailer does”.
excellent post!!
We have 1 double wide trailer in our portfolio too. It is a cash makin machine. However like you I agree that these things do have their challenges.
#2 General Landlording & Rental Properties Contributor
I personally prefer to flip mobiles as opposed to renting them. Maintenance is far to high long term especially since the type of tenant that rents a mobile is general the bottom of the barrel tenant wise. To do flips you must be in a area that the homes have a real value and a market.
MHC owners understand the economics of owning the homes and prefer to only own the land. POHs are a pain in the behind.
You're absolutely spot on about the particle board, sawdust and glue part. Mostly Elmers glue for that matter which is water soluble and only serves to exacerbate an already very tenuous unpleasant situation.
We've been replacing particle board sub flooring for years for insurance companies. Probably paid for a couple of my kids college education and drainage issues probably paid for a couple of others for sure. But what's interesting is the insurance company will not pay for mitigation.
They will only pay to replace like with like. So if the homeowner wants to replace the particle board with OSB or plywood they have to pay the difference which in the overall scheme of things is quite negligible and well worth it.
Belly boards aka vapor or varmint barrier is always a problem and needs to be checked regularly as plumbers and other tradesmen will tear it from limb to limb and not repair or replace it correctly if at all. Or varmints i.e. rats, mice, possums and even skunks will often choose to nest up in those cozy little areas.
One final thought, more for the benefit of your readers than you because it appears that you've already replaced your roof, always make sure whoever does the roof know where and how to walk on it before they just start prancing around breaking those already very skimpy and flimsy trusses.
I can't even begin to tell you how many truss repairs we've done over the years. If I had more kids it might have paid their college educations as well. But on a more positive note I know that it has paid for a few luxury cruises and exotic vacations for my wife and I over the years. LOL!
Great post. Lot's of good and very factual info. It's great hearing from folks who've actually strapped on a tool belt and jumped in the trenches.
#2 Mobile Home Park Investing Contributor
- San Antonio, TX
Great tips, thanks for sharing! :)
Wow! Great post! I've never thought of it but it totally makes sense. I'll keep that in mind if I ever install AC in a mobile.
Thank you for the information. I was just looking into a deal that came to me. Trying to figure out if I want to get into MHs. May I also ask what is that app you are using?
@Kim Surrency, it is the 10bii financial calculator app by inaday development. It is one of the few apps I actually pay for. It cost $5, but it is well worth it.
Awesome! Thanks @Joey English I’ll check it out.
Great post. I'm also a big fan of MHs. MHs on land. We currently 4 have rented and another in process. Would like to hear from more investors of like mind.
I grew up in MHs. From a 1953 Spartan, to a 10x60 Liberty, to a 24x60 Mozark, and so on. The first house I bought was a double wide on a raised basement. I thought I was pretty well aware of the quirks and ins and outs. Always something new to learn.
This post was very timely...I just did a walk through of what was billed as a "remodeled and updated" doublewide on 1/4 acre, that still needed work. I'm looking for a fixer, so I figured there was little there that I wouldn't know. But wow. sponge floors covered with the cheapest wood linoleum available, and very badly installed. When walking through I kept thinking of this post.
Thanks!
I've always been turned off by MH because of the atypical construction and repairs that I know little about. This post has me rethinking though. Is anybody buying land and placing new mobiles or doubles? I may be more interested in that Avenue to get my feet wet.
Thank you for a great post, there is so much to learn!
Quote from @Joey English:
Trailers is as trailers does
I’m a big fan of mobile homes. To me, they have the best returns, by far, of any investment in real estate today. But be aware, mobile homes are quirky.
We have a doublewide on Berry Bennett Rd. It was a little rough when we bought it, but we got it rehabbed and looking nice. We did all the normal stuff like painting, new floor covering and new lighting. But we also did some big ticket projects like putting on a metal roof, new plumbing and installing a four ton package unit.
In case you don’t know, a package unit is one of those huge outside AC units. When you see them, you probably think they’re way oversized for the house they’re sitting next to. For most houses, the air conditioner has two parts: the inside and an outside unit. The inside portion consists of a furnace and air handler, while the outside unit is a condenser. This is called a “split unit” because the furnace and the condenser are split into two parts.
A package unit, on the other hand, has both the furnace and the condenser all in one big outside unit. This makes them very efficient and also causes them to require less maintenance. Because of this, even with the slightly higher cost, a package unit is a great investment for a rental property.
Mobile homes don’t come from the factory with a package unit. They normally have a split unit that’s specifically designed to work with mobile homes.
The “Specifically designed” part brought with it a lesson we just learned the hard way. We thought we were doing a good thing by upgrading to that four ton package unit.
As it turned out, we were wrong.
Something you should know about mobile homes is that it’s best to buy an early 1990s unit or newer. The reason is that in the early 90s, they started using an OSB-type material for the subfloor.
Prior to that time, mobile homes were manufactured with particle board floors. This material is nothing more than sawdust and glue that when it gets wet, the floor begins to sag and fall apart. You’ll literally step right through the floor if you’re not careful.
The house on Berry Bennett happens to be an 86 model with particle board floors.
Also, mobile homes don’t use the same ductwork as regular houses. They have a trunk line made of sheet metal that runs down the center of the home.
When we put that brand-new package unit on those metal trunk lines and that ice cold air hit them, condensation formed on the lines like a cold coke on a hot day causing the subfloors to get wet.
The AC ran for months before the tenants noticed anything. By then, it was too late – the floors began to buckle, and then they fell through. We had to replace about 400 square feet of subfloor in the livingroom and bathroom. OUCH!
It wasn’t all the package units fault. The belly board had been cut (that’s the plastic that holds the insulation in under the trailer) for previous plumbing repairs. That gave way to lost insulation around the metal trunk lines which led to the condensation. Like I said, mobile homes are quirky.
Even with all this, the property is still a great deal. We’re all in on this doublewide on an acre for less than $30k, and it rents for $615 a month. If we keep it for nine years, that’s a return of 20.73 percent.
With returns like those, you’ll want to have some mobile homes in your portfolio. Just make sure you don’t over-upgrade. Sometimes you have to say, “Trailers is as a trailer does”.
Do you find that buying trailers in a mobile park is best, or buying trailers on land?
@Steven Foster Wilson, I started out buying them in parks and doing a strategy called a Lonnie Deal. That is where you buy them for cash, do no fix up and then sell them with owner financing. It is a great strategy where you recover your initial investment in the first year in most cases. And the cashflow amazingly there after. But the notes on a Lonnie Deal are fairly short, between 3.5-6 years in most cases. Which means once they pay off, that cashflow is gone. So I elected to replace my Lonnie Deals with landhome deals now. I owner finance some of them and I rent some of them... and the my double wide's rent for just as much as my site build homes, but with a third of the entry cost. Anyway, both in parks and on land are great strategies. And you should use which ever one, or both, that best fits you and your investment needs.
@Joey English this sounds like its a large cash investment upfront? no? Did you decide to do this because conventional financing is near impossible on MHP's? I'm curious what the cash on cash return would be for something like this vs a traditional multifamily deal that youre able to finance?
Quote from @Steven Foster Wilson:
@Joey English this sounds like its a large cash investment upfront? no? Did you decide to do this because conventional financing is near impossible on MHP's? I'm curious what the cash on cash return would be for something like this vs a traditional multifamily deal that youre able to finance?
Hey man, sorry I don't get on here very much. It would take a long time to type out the answer to the question. Instead, how about we jump on a zoom call this week and I'll show you real deals, real numbers and the returns on it.
Quote from @Joey English:
Quote from @Steven Foster Wilson:
@Joey English this sounds like its a large cash investment upfront? no? Did you decide to do this because conventional financing is near impossible on MHP's? I'm curious what the cash on cash return would be for something like this vs a traditional multifamily deal that youre able to finance?
Hey man, sorry I don't get on here very much. It would take a long time to type out the answer to the question. Instead, how about we jump on a zoom call this week and I'll show you real deals, real numbers and the returns on it.
Did you guys set a time for a Zoom call? I'd be interested in watching in, if that's OK. I've got some cash waiting for the right deal, and am open to all strategies.
I just moved up to the NE Florida area, and prices are out of control.
Quote from @Buck Lawrence:
Quote from @Joey English:
Quote from @Steven Foster Wilson:
@Joey English this sounds like its a large cash investment upfront? no? Did you decide to do this because conventional financing is near impossible on MHP's? I'm curious what the cash on cash return would be for something like this vs a traditional multifamily deal that youre able to finance?
Hey man, sorry I don't get on here very much. It would take a long time to type out the answer to the question. Instead, how about we jump on a zoom call this week and I'll show you real deals, real numbers and the returns on it.
Did you guys set a time for a Zoom call? I'd be interested in watching in, if that's OK. I've got some cash waiting for the right deal, and am open to all strategies.
I just moved up to the NE Florida area, and prices are out of control.
We never did. But if you want to jump on a call, I'm more than glad to show you what's been working for us.
Quote from @Joey English:
Quote from @Buck Lawrence:
Quote from @Joey English:
Quote from @Steven Foster Wilson:
@Joey English this sounds like its a large cash investment upfront? no? Did you decide to do this because conventional financing is near impossible on MHP's? I'm curious what the cash on cash return would be for something like this vs a traditional multifamily deal that youre able to finance?
Hey man, sorry I don't get on here very much. It would take a long time to type out the answer to the question. Instead, how about we jump on a zoom call this week and I'll show you real deals, real numbers and the returns on it.
Did you guys set a time for a Zoom call? I'd be interested in watching in, if that's OK. I've got some cash waiting for the right deal, and am open to all strategies.
I just moved up to the NE Florida area, and prices are out of control.
We never did. But if you want to jump on a call, I'm more than glad to show you what's been working for us.
Joey, I don't want you to jump on a Zoom with me, but if you do a Zoom with someone else I also would like to be a fly on the wall.