I'm wondering... Do manufactured houses (on their own land, not in a park) rent out for as much as a single family house? It's on a foundation and looks like it could definitely cash flow very well, but only if it rents for as much as a like property of a regular house.
I've always wondered about this topic! Thanks for posting the question. I live in SLC Utah. I have a few clients/friends that rent their units out for about $450 to $600 per month and the tenant pays the HOA/land rent/utilities etc. In my area rents go for about 1+ per sq foot. For example, a 1000 sq foot 2 or 3 bed 1 bath condo would rent for about $1000 and owner would pay taxes/insurance and HOA (which is usually SWT). Whereas a Mobile Home would have a land/HOA payment of about $500 and would rent a 1000 sq foot 3 bed 1 bath home for about $500 or $600 per month and pay the land/HOA/utilities on their own. I suspect you could just charge a gross rent and pay it yourself leaving them with utilities. But the point is it seems like your tenant pool shrinks but your gross rent stays about the same and the purchase price is greatly decreased i.e. 30 to 50k instead of 120 to 140k for a condo. A good single family rental might run you about 180 to 190k and rent for the same, about $1000 for a 1000 sq foot 3 bed 1 bath.
I'd like to know more about how the land rent/utilities/HOA etc is structured in order to make good decisions about investing in modular/manufactured homes...?
The answer to your question is very specific to your area. Your acquisition cost is typically less, but a mobile is typically not as nice or as comfy as a stick-built, which will likely yield lower rents and sometimes a less credit-worthy or lower performing renter. Not saying all folks who live in trailers are bad renters, but for me, somebody who can afford higher rent is typically a better tenant who is way more likely to perform.
Some areas you'll get the same rents as a stick-built, others there will be anywhere from slight to drastic differences in rents.
In my town a mobile home that has been converted to real property on it's own parcel (outside of a park) is common only in certain parts of town, and those are not really nice areas - in a town that really only has 1 or maybe 2 C and worse streets, so its really not bad areas, but all things being relative...
These do not resell very well - I think for a couple reasons (in no particular order, and just to be fair, all of these can be argued one way or another...):
a. While we all know that the value is really in land, the improvements are pretty darned important - trailers get old and crappy way faster, and don't generally clean up as well as a stick-built house.
b. Saying "I live in a trailer" has a somewhat negative stigma with some folks.
c. Mobile homes are generally not very efficient, so while my AC bill in June in a 6 bed, 5300 sq ft house was about $200, the AC in a 1000 sq ft 3 bed double wide might be $140.
I know your talking about a mobile on it's own parcel outside of a park, but many parks around here don't allow rentals - so they become a seller-finance deal.
I have yet to sell a mobile home to a buyer that is relocating from a stick-built. My experience is the market for mobiles is somewhat limited to 2 demographics:
1. people who have lived in mobile homes their entire life
2. old people who are moving into a mobile home retirement park - you know, the ones with club houses pools, security guards, social halls (I believe these to be one of the best places to invest - if you can find one that allows rentals)
Sorry for not having a real great conclusion to this post - but hopefully this helps a little bit.
That definitely helped. Also, makes since on the resell side of things too.. Those are literally the only 2 demographics I can think of as well for a mobile home. Thank you for your input.
I have four currently and my parents have another four. They rent very well and for much more than a similar priced stick built home. Mine are all on half to one acre plots outside parks and most outside city limits. My stick built home is only renting for a bit more than my nicest MH, but cost me twice as much.
That said, it is hard to get someone to lend money to an investor on a MH even on land. It is pretty much a cash business unless you want to buy new ones and install them which I don't think would work out well because of the massive depreciation they have in the first couple years. Once it is ten years old it sort of hits its stability point and as long as it it maintained doesn't drop any more, but also doesn't really appreciate more than inflation either. You make the money on the buy.
I am still looking at a few, but am concentrating more on looking for stick builts that I can get a loan on to take advantage of the low rates while they last.
Thanks for your input as well.. So much to think about. I'm probably going to check it out just because I'm curious to learn more on manufactured (mobile) homes. I'm trying to get creative with my limited options I have available to me right now.
I have a few that rent for $875 to $1425. If they were conventionally built homes, I'd get $100-$350 more per month. However they cost about half of what brick homes would cost so the cash flow is good.
Around here, we seem to get about the same as a stick built. (ours are modern mfhs) If its any less than stick built rentals its because usually a stick built house of the same era has a garage, which ours don't. Any rentals that are less also have their reasons, such as, being old. Renters like modern, comfortable homes. heat pump, insulation, those are magical words. We're still learning here, but that's just what we've observed so far.
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