Does anyone invest in mobile homes to use as rentals? (Not an entire MHP) What's your experience with the ROI vs depreciation vs repair costs, etc?
The reason why not too many people do this, assuming you mean mobile homes on leased land. Is that the land owners have a nasty habit of raising the land lease whenever they get a whim, so you can really get stuck when you can not raise the rent, it does not cover the cost to carry, or even the rent on the units.
Now if you own the land outright, you have a horse of a different color, I would say go ahead and buy and rent away.
@Rich Littlefield Yes I mean more of owning land with a mobile home, and just renting it like a normal single family rental. I know a couple people who have done this and been successful in getting started since the prices are so much lower to get into it, and the mobile homes can still rent for the same amount as a lot of lower end houses. I know the main problem is they don't appreciate like normal single families if at all. But I was curious if anyone else on here has had experience and/or success with using mobile home rentals as a starting point for REI.
One of my rentals is a mobile home on a 1/2 acre lot. The market has gone up where it is and I would be able to sell it for a lot more than I paid for it 3 years ago. It rents for just as much as a single family home I have in the same area on a similar sized lot (actually more as it is a 3 bedroom vs the 2 bedroom SFH). I had no problem renting it.
For a rental, I don’t think I’d mess with those older mobile homes with aluminum siding, because renters will have it all dented up and there’s no way to fix it. I’d only buy one that has vinyl siding that can actually be repaired.
Also, cabinetry in mobile homes is almost always cheap particle board and usually damaged with doors and drawers falling apart. If you can diy it’s not a huge expense, but expect it eventually.
Another issue is polybutylene plumbing (cheap gray pipe). I think they phased it out around 1996 or so, but it’s definitely worth inspecting.
@William W. It will cost, but it is easy enough to reno a kitchen. The place I got needed about $25K of work including new kitchen and bathroom. Those renos increased the value of the home by $65K, combined with the local market; it is now worth almost $100K more than I paid for it.
Two issues to keep in mind is that the homes, because they were built vey flimsy, have higher maintenance costs than regular homes (very likely 50% range or higher) and second the quality of tenant renting a "mobile home" will likely be very low. Social standards may be nearly non existent meaning you will need to closely manage. They will be your normal C/D class tenant. They can be a challenge bringing in dangerious breeds of dogs, unlicensed vehicles, and unauthorised "guests".
@Jake Roland Yes, people do. I think a lot of times around here at least, a decent trailer rents for as much as an equivalent house, maybe a little less.