Buying a Manufactured Home in California Near Beach Good or Bad?

16 Replies

Hello everyone,

I am moving to California in 2016 for a job opportunity and am curious about the real estate market there as it relates to mobile homes. Typically I have read to avoid these types of properties as they do not appreciate in value, but in the area I am looking at (Newport Beach, Orange County) , manufactured homes seem to be more "higher class", expensive, and right near the beach. Considering they seem to be the only type of home in my price range, just curious if this is a smart investment instead of renting? Like I said, normally I would avoid a manufactured home, but wondering if things are different in CA , specifically if the house is near the beach. My alternative is renting until $1M+ single family homes become feasible. 

Here are some examples of what I am considering and referring to:

http://www.realtor.com/realestateandhomes-detail/2...

http://www.realtor.com/realestateandhomes-detail/7...

http://www.realtor.com/realestateandhomes-detail/2...

The homes look very nice on the inside and out.

Any input greatly appreciated.


Thanks

Hi Justin,

I live and work in Newport Beach. I am a broker and an investor. I noticed your post and thought I would chime in. What most buyers don't see or realize when they are looking at these mobile home listings is that there is space rent on top of your loan payment for the manufactured home. These properties you have  highlighted have monthly space rent from $1800-2400/month.

Once most people find this out they are no longer interested in the manufactured home option. For those that do buy them they just want to live close to the beach and you can't get anything as close to the beach as these for this price.  It would not be an investment I would recommend. I think you are much better off finding something more like a condo, duplex or entry level home that can appreciate. If your budget doesn't allow for Newport Beach prices then I would recommend going a little further inland where you get more for your money.

Let me know if there is anything I can do to help!

Good luck!

Okay, I am now going to give you a my 2 cents. Typically speaking when the market takes a downturn even in those areas of OC they really drop significantly. I feel that they are wonderful long term investments for the right renter that will take TLC of the subject as they are not like stick built home and have a shorter shelf life. They are also more challenging in a downturn to obtain low financing. So in a nutshell if depends on your particular situation. If you are buying for your self personally and want appreciation on this type of investment you may want to revulate.

@Justin R. You have to realize that Newport Beach is the crown jewel of Orange County, and has THE highest prices of anywhere. However; all of the coastal areas are high priced. If you want to be close to the beach action, and aren't worried about appreciation and can afford the space rent, those are good deals. However; if you're looking for an investment, a condo not right on the beach but close by would make more sense, though they're higher priced. 

What city will you be working in? Is it just you? What type of work do you do?  I'd suggest coming here and getting to know the lay of the land. You probably will want to be a little further inland. Even in areas like Irvine, Lake Forest, Mission Viejo, etc. as rents are cheaper than Newport Beach. 

The value and appreciation is in the dirt ... that is the limited resource that they are not making any more of, especially in coastal SoCal. The home on top of the dirt depreciates, which is why the IRS allows this expense to be deducted on rentals. 

With a mobile home you are buying the depreciating part (the structure) and renting the appreciating part (the dirt under it). This is why mobile homes are a great investment for the park owner, but not so much for the home owner. This was already mentioned by others, but hope this clarifies some of the thought process behind it.

BTW I am also not a fan of condos because you do not control the land or outside of the structure. I'd take a single family home with no HOA over a condo as a longterm hold any day of the week, even if it costs more, is older, and I had to go to a nice hood inland a bit to get it. But that's just me ...

If you use Redfin for your RE search, it will usually tell you the space rental.

Personally, I wouldn't feel safe in earthquake/landslide country in a manufactured home, but that's just me.  

What does "job opportunity" mean?  Do you actually have a job or just have the chance of getting one?  How long are you willing to drive?  (California driving is more accurately measured in terms of actual time on the road, not miles unfortunately.)  

Not everyone lives in million-dollar-plus houses.  You can find a nice place for half that if you go to North County San Diego and drive a bit inland.  Rents also are less and you get more if you go to some place like Oceanside, the first city south of the OC border.  Oceanside has gotten a bad rap, but there are some areas (Rancho del Oro/Ivey Ranch, for example) that are quite nice.  We've got a rental home in RDO that's six miles from the ocean, and it rents for about $2500.  It's probably about an hour's drive up to Newport.  You also may be able to find a suitable rent-to-own option.  

While you're budgeting for your move, consider that the cost-of-living is expensive near the coast (especially gas prices) and taxes tend to be higher, too.

If you decide to look at condos and find some that seem extraordinarily cheap, make sure they are not on leased land either. This is a similar situation where you own the structure but pay a monthly lease payment to the land owner. A lot of people see these priced low in Huntington Beach and Costa Mesa and get very excited, but they don't realize there is a $600-800 lease payment on top of the HOA fees. To avoid leased land condos, make sure it says 'fee simple' and not 'leased' in the listing details.

Thanks for the replies everyone. I am going to be working in Irvine. I have explored the area and am somewhat familiar with the areas I like. I know Newport is expensive, which is why I was confused to see such a low priced property in that area and knew there had to be a catch, just doesn't didn't know that catch was. Thanks for the great tips on how to avoid land lease deals!

I would not buy a manufactured home or any home very close to the beach right before El Niño. Also take into account the toll roads between work and where you will live and get that transponder on your car as forgetting to pay the toll through the website will be a $200 fee

Originally posted by @Justin R. :

Gabe,

I knew there had to be some catch! Your answer is exactly what I was looking for, even if it isn't the best of news.

Thanks!

 The lot rent is listed right in those ads so I'm kind of surprised you had to come here to find out about that information. You might want to pay closer attention to the details and read all the information available to you on any prospective investments you look at in the future. 

If you are working in Irvine, you'll find it is one of the most antiseptic cities you'll ever visit. I used to live there and own rentals there. Very beautiful, but a total bore.

@Aaron Mazzrillo

I have heard the same about that area from colleagues that went to university there Irvine. And a relative of mine was loving Aliso Viejo in a relationship which might not be a bad commute to Irvine. But the HOA fees were killer in AV. And once he was single he realized that being single in Irvine is pretty much a nightmare... It has great land planning and seems safe but no walkability and no feeling of individuality. It's like a more expensive Calabasas with expensive toll roads.

I'll chime in since we just finished our 35th mobile home as investors. And just started out 36th yesterday.

And I used to live in Anaheim Hills. 

Appreciation is great but like mentioned, there is risk of bubble again. Already happening in San Fran and surrounding areas. Check it out.

Market goes down, housing gets hit. Mobile homes fly!

Yes they depreciate. But ...

Most investing is about cash flow and ROI and they blow away traditional ROI with what is happening today. Low cost of entry and way bigger returns.

If they are on payments, the loan is retired in 5, 7 or 10 years. (Yes I know about Dodd Frank) So put another one in your portfolio.

Most people are not getting new loans. Most loans right now are refis.

We just sold a 1972 2/1 800 sq ft metal siding metal roof OLD mobile home for $36,900 CASH in the Portland OR area. ROI was over 500% annual. It was fixed up nice and I know it's not CA but jeez! That's probably 10 times what it sold for new. So depreciation?

With the economy, market and home ownership at it's lowest point since 1965...

Yes they have rent but once the home is paid off, if you do it right, it's half of regular rent if you don't want a regular rental, can't get a loan or don't want to pay a ton for a cheap house in CA.

A LOT of people are looking for alternatives like @Justin R. . So the depreciation, bad investment is very old school today. I even have an iPod instead of cassettes now!

Originally posted by @Tabitha K. :

One more thing to consider.... I wouldn't personally feel comfortable being to close to the nuclear power plant down there.

 They shut that down a few years ago. Still a risk, but at least it isn't active any longer.

Originally posted by @Aaron Mazzrillo :
Originally posted by @Justin R.:

Gabe,

I knew there had to be some catch! Your answer is exactly what I was looking for, even if it isn't the best of news.

Thanks!

 The lot rent is listed right in those ads so I'm kind of surprised you had to come here to find out about that information. You might want to pay closer attention to the details and read all the information available to you on any prospective investments you look at in the future. 

If you are working in Irvine, you'll find it is one of the most antiseptic cities you'll ever visit. I used to live there and own rentals there. Very beautiful, but a total bore.

 Hello and welcome!  Always run the numbers to make a determination.  It might be a good but doing the numbers is the only way to find out if it is a good deal.  I am 59 years old and I was born and raised in Dallas Texas.  I graduated from college and got me broker license in 1980.  I have been in the construction business since I was 17.  I found BP about 3 months ago and I am still learning.  If you think I can help you at all please contact me at any time.  Good luck! The numbers and the rules will be the most important.