New construction mobile home

13 Replies

I’m buying a lot and doing all the prep work (septic, well, power, grading, driveway ect) then putting a brand new mobile-home on the lot. Looks like the lot and prep are going to be about $25k the home will be around $60k installed. 20 year old homes in the area are selling around $150k. What am I missing my profit margin is huge. What should I watch out for. I have verified that I’m allowed to do septic well and place a mobile home in that location. I’ve previously flipped houses and have several rental and am an agent. It just feels too easy.

@John Powell It will depend on your exit strategy. Are the comparable homes also on lots and manufactured? Personal property or real property (attached to land)? This will determine what you can sell the home for and whether or not an end buyer will be able to get financing. Unless people are willing to pay cash in your area and/or can easily obtain financing, you may have to offer seller financing should you decide to sell it. You can also rent it out as well, if that's the route you want to go. Hope that helps! 

@Rachel H. My preferred exit strategy it to sell as new construction attached to the land. I talked to a local lender who does mobile homes and he said as long as I don't live in it buyers can buy it with USDA loans as new or FHA either way but FHA has a 90 day waiting period from when I close on the land. The homes referenced in the $150's are 20 year old mobile homes with land/lot. Stick build is $250k+

Hi John, Must be on a permanent foundation here in California to qualify for financing. This is done quite often in my area. They like to buy lots with old single wides so the utilities are there already. Pull off the old trailer and replace with new manufactured home then sell it for a nice profit.

We finance them for real estate investors . You may want to check with a conventional lender guideline that it is okay finance for a used home that has Been  moved more than once and lastly the ratio of land to the home .

@John Powel

This is a niche that is a hidden goldmine, I do these in my area, except with a twist. Conservatively there are 10,000- 12000 mobile homes on private lots,(.33 -1.0 acre lots) within a 30 mile radius of me. About half of them have very old (20yrs or older) rundown MH’s on them, all with city sewer,power and water. Ideally I buy them for 100k +/- 10k, hall off old mobile and clean lot for 10k+/- and set up new MH for 80k, so I’m all in 190k-200k. I List and sell these as affordable housing for 320k, they sell in 60-90 days all year round.Try to net 100k per deal, after all expenses.

I’m working on getting MH’s factory direct, and I get an occasional lots for 75-80k, increasing my margins even more. We have to have them on 8/point foundations ($8000) or full perimeter foundations (15-$20,000)to get them financed, most already have 8/point foundation in place, or I have it put in.

The median home price in our area is $490k and climbing rapidly. This is “Affordable Housing”, Brand New Doublewide MH, 33acre lot for $320,000, and climbing rapidly .

Raw land and installing utilities also works with this model, I connect to city water, sewer, and power. A lot more work and less profit but still profitable.

I am an agent/PM/investor so I know the market exceptionally well. I’m looking for capital partners to scale up and get into MHP space (100 MHP’s within a 30 mile radius of me) Anyone interested please feel free to contact me. (Have pictures if interested)

point foundation or I put them in.

@Scott Mcnemar

Glad to hear the business model is working elsewhere. I have thought about doing it closer in to Atlanta where price points would be very similar to what you are talking about. I just figured I would go out where regulations are minimal and the cost to do one is lower so that I could learn/perfect the process before moving to the higher cost of living area. It sounds like you have done this many times. What is your average turn around time? From purchase to sale? What kind of buyer concessions/incentives do you typically offer?

@Jo-Ann Lapin

The homes I’m working with are brand new from the factory to my lot and put on a permanent foundation. I didn’t think about the land to home value ratio. On a cost basis it is about 50/50 on tax value basis the home would be significantly more valuable. The developed lot cost roughly $40-50k tax value is probably $30k. The mobile home cost $56k MSRP is $80k. Not sure what the bank bases the ratio on.

@John Powell Our local market here is very hot right now even in dec, with thousands of California buyers moving to the area. Stick built existing homes, get multiple offers and sell in a week or faster if priced right.

Turn around times are 6mo+/- 30 days. I have two problems I’m working on to reduce that significantly, 1. developed lots at 75-100k are highly sought after, very competitive at that price point, several other players doing the same thing. 2. Getting MH’s from manufacture is taking 4-6 mo, this is my main objective right now, reducing delivery times from factory and going factory direct and reducing the delivery time to 60-90 days, and getting MH’s for less!.

We offer no concessions, market is hot right now, and will only get hotter this spring. I offer them a nice turnkey, new doublewide MH, on a very clean attractive .33ac lot, for right around 320k, they were selling for 250k several years ago. My projections for spring are we will list them at 330-340k. Again the Californian’s are driving this market. Los Angeles median home price is 700k, Sacramento C’s is 500k, and the SF bay median is 1million, these are our main feeder markets (75% of Californians are thinking of moving, population 40m). We offer affordable housing at an attractive price. I can’t build them fast enough, looking to streamline processes and scale to one a month in the future.Affordable housing is an extremely under served sector, if you can make the numbers work.

@John Powell , as long as your get everything approved through the county and its all legal, sounds like a cash cow to me especially these over inflated housing prices will be sending more people in your direction

good luck

@John Powell   I'm in a very similar market in GA it sounds like.  I sell my flipped mobile homes for around 150k.  I'm looking to purchase land to move new homes to as well.  I think its great.  Ive been doing better on them than I did on SFRs. 

Hi @John Powell .  It has been a few months since you posted this and I'm intrigued to see what you've learned since.  @Scott  

@Scott Mcnemar , what you shared about your market is quite compelling.  Anyone, I wonder what market factors make this work best?  I'm guessing it works far better closer to a large city on the demand side, but of course the supply (lots) there would be the challenge.  Great thread!