Why not buy MH on private land for rental?

11 Replies

Ok looking at my next project: either a MH on its own lot in decent area or SFH in nicer subdivision. Which would you buy for a future rental? Here's the deets:

MH (1989) asking price: 70k with 15k Reno costs. Rents run 850-900 per month. Coc return is 15.6%

SFH(1986) asking price: 200k with 2k Reno. Rents 900-950 per month. COC return 6%

Seems like a no-brainer to me, but am I missing something with renting out a MH on its own land? Sure I'm not getting as much appreciation as the SFH, but I'm still appreciating on the land...

Thanks for your thoughts!

A

@Rebecca E. at some point the mobile home will have little to no value. Additionally they can be harder to finance so if you need financing that may be tricky. Otherwise it is a matter of preference. 

I have several DW MH's that are on their own lot in nice neighborhoods that I get $1000/month rent on. They are working out nicely. I have less than 20k in each one (with land) after minor renovations 

@Tyler Gibson

Thanks for the insight! Financing for me is not an issue, but when I sell it eventually it may be an issue. I guess I'll hope the land costs make up for the difference? At least moving a mobile home is easier to raze than stick built? Do you have any experience with that?

Originally posted by @Rebecca E. :

@John Underwood

Wow. I thought $400 per month was a great cash flow...jealous 😀

I was just wondering if there was something I was missing because so many people dump on MH.

 When I found out Warren Buffet was the single largest owner of MH parks it changed my thinking about MHs.

@Rebecca E.

Most of my rentals are MH on private property. They are Not depreciating. After renting them for several years I’m selling some on contract. I’m making good money being the ‘bank’. My calculator says they have been and continue to be an excellent investment.

Many investors look down their noses at MH. They just don’t know any better.

@Rebecca E. good luck with this deal, both seem attractive. The more and more I research and speak with other investors in the MH niche the more interested I become. I own a couple SFH currently but MH communities appear to be incredibly steady, consistent with returns and great for the long term so far. I would like to hear what investment you end up going with. @John Underwood and @Jerry Lucker I would be curious to know if either of you started out with this niche as your investment focus or gravitated to it due to certain advantages it offered?

Owning a park is different than owning the mobile home. A park is easy because you rent the land and there is almost no maintenance to deal with. Mobile homes tend to be built cheaper than a stick-built home and will require more maintenance over the years. They also depreciate in value, just like a car.

It's a cheap way to get started and get cash flow but it won't appreciate the way a standard home would.

Originally posted by @Jerry Lucker :

@Rebecca E.

Most of my rentals are MH on private property. They are Not depreciating. After renting them for several years I’m selling some on contract. I’m making good money being the ‘bank’. My calculator says they have been and continue to be an excellent investment.

Many investors look down their noses at MH. They just don’t know any better.

 Affordable housing demand continues to grow and has no end is sight. So smart to rent, then finance the MH.  

What loan terms are you offering the buyers?

 

@John Walsh

After learning a lot about the real estate business in general I decided it took a lot of time and money, the profit margins were thin, and the competition was fierce.

I stumbled across flipping mobile homes in parks. Took a little money, the profit margins were outstanding, and the competition was pretty much nonexistent.

I made enough money to buy mobile homes on private property as rentals every year for several years.

Fortunately the business is still the same 20 years later.

@Rebecca E. I love the mobile home parks. I have one with 13 mobile homes that are all set up , with a 10x 12 covered deck , concrete driveway , with all appliances. I took good used mobile homes and remodeled them like a stick house with all new wiring, plumbing, vinyl siding , new insulation, sheet rock , a complete remodel . Those net over $12,000 per month . I am happy with those number as houses are not that profitable . I know not everyone wants to do that type of remodeling but it really worked for us and we are happy with it . Thanks

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