Mobile Home Properties?

Question

I know they depreciate rather than appreciate, but could a mobile home be a good rental property. They are significantly cheaper and possibly a way to get started?

Frank Rolfe · Answer

Mobile homes are like exotic cars -- they can either have amazing performance or be perpetually broken down. Your success or failure is based on 1) understanding what you're doing 2) being honest about the market and 3) choosing the correct mobile home to buy.  It's not hard to become a master at all three, but it's suicide to not at least have a rough idea of what works and doesn't, so you can put all homes you look at in either the "it's a deal" box or the "it's not a deal" box.

If you really want to invest in mobile homes you need to 1) read up everything you can find on the topic 2) become a frequent user of bestplaces.net and other internet sites for market data and 3) familiarize yourself with what homes are going for so that you can guess from a photo of what a good price would be.

Can you accomplish this? Absolutely.

Justin Tahilramani · Answer

I purchased two mobile homes from FEMA and set them up as short term rentals on my farm. I paid about 18k each (they were basically new) + 10K or so for septic, water taps, moving them in, underpinning, etc. I rent them for between $1,000 - $1,100 each per month (I pay utilites since they are STRs). I rent mostly to contractors and traveling nurses. Not a bad return in my opinion.

You need to be creative if you want to make money.

James Murphey · Answer

I love the idea of only being responsible for for a plot of land, and hookups.  Getting paid $200 for that in a small 10 unit park.  Essentially making 2k a month for minor maintenance cost.  Actually owning multiple mobile homes that are deprecating and need constant maintenance sounds like too much work for me.  On Bigger Pockets podcast the Park brothers detail their model of buying and running massive parks.  They usually try to offload the mobile home to the tenant, and then just collect rent on the actual land.  You have hardly any maintenance cost.  Just a thought.

Justin Tahilramani · Answer

@Ryan S. - Government surplus auction.

Ryan Mahoney · Answer

@Luke Amsbaugh - I would just run your numbers figuring that appreciation would be negative (depreciation) and take your home to $0 value when calculating your exit.  I would also figure higher cap-ex and repair costs.  Probably higher vacancy rates as well.  If after doing all that the numbers still look good it may be a good investment.  As always have strong criteria regarding who you rent to.

@Justin Tahilramani - innovative strategy.  I love it.

@Hector Peralta - I watched John Oliver's piece on mobile home park investors the other day.  It is interesting to see the other side.  From our point of view as investors mobile home parks can be a great investment with a stable tenant base.  From renters point of view investors can unfairly raise rents on fixed and low income people who are trapped.  As with anything we hope as investors we provide a high quality, safe, and affordable place for people to live while allowing us to make a fair profit.

Hector Peralta · Answer

John Oliver. Ouch.

Justin Tahilramani · Answer

I bought mine in North Carolina. Make sure you talk to your city/county and determine what the requirements are. You may need wind zone I/II/III depending upon your location. Also want to know what transport/set-up will cost along with water/septic.

Justin Tahilramani · Answer

@Braden Coleman I just went off the pictures. Replaced carpet in one - the other was all vinyl. Both were in pretty decent shape.

Rachel H. · Answer

@Luke Amsbaugh It can but you need to look at the neighborhood you're buying in. Just like single-family homes, mobile homes exist in different types of communities. The type of neighborhood you buy and invest in will determine the type of clientele that will be attracted to your asset whether it be a mobile home, single-family home or apartment building. Find areas you feel comfortable doing business in with the type of clientele that works with your personality. This is one of the keys to being a successful real estate investor. Hope that helps!

Heath Ryans · Answer

@Luke Amsbaugh absolutely. Nowhere else are you going to find a deal that can cashflow like a mobile home. Most single family investors strive for a property that meets the 1% rule. You can hit 10% on a mobile home all day long. As long as you buy homes in a nice park with a reasonable lot rent.

Mobile Home Properties?

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