Realtor · MD · Member since 2020 · 5 posts · 2 votes
I have a investor client who is potentially interested in a mobile home and using it as a rental property. Is this wise and be a good use of her money? Maryland is the location of this property.
without all the pieces here along with what @Rachel H. said.
Does it sit on its own lot? Is it a leased lot? Would the lot manager or company allow a non owner occupied mobile home? what would the COC be on a mobile home after purchase and holding costs if it is leased lot?
without being experienced at all with mobile homes, those are my first questions along with Rachels points.
@Angela Taylor-Carter It will depend on the condition of the mobile home and the neighborhood where its located. The investor will need to be comfortable with the area and the type of clientele the community attracts to make the deal work. Also, you'll have to see exactly how much work your investor client wants to do to the home and what is needed to fix it up to meet the demand in the area. Hope that helps!
without all the pieces here along with what @Rachel H. said.
Does it sit on its own lot? Is it a leased lot? Would the lot manager or company allow a non owner occupied mobile home? what would the COC be on a mobile home after purchase and holding costs if it is leased lot?
without being experienced at all with mobile homes, those are my first questions along with Rachels points.
If they need a loan, the mobile home may need to be newer than about 1998 for the lender to approve it. There will be a metal plate somewhere on the outside with the year built, along with some pieces of paper pasted up inside (kitchen cabinets or near breaker box) with more information. This came up in a previous thread about mobile home investing: https://www.biggerpockets.com/...
I really appreciate the replies received on this post. Unfortunately investors were not allowed in this particular community. I will definitely keep this information as a point of reference because mobile homes are intriguing and seem to be coming up more and more for me in my real estate business. Thank you!
I currently have several mobile homes as rental properties myself, and I'm a big fan of them. The returns are often better than other types of real estate investments- it's not uncommon to have a rental with a 35+% annual return. However, these returns do come at a cost.
With mobile homes, you are missing out on two large benefits of traditional real estate: Appreciation and Cheap Financing. You'll also likely find that your turnover is slightly higher when compared to SFH's, and that mobile homes aren't designed to last super long-term (seem to top-out at around 50-60 years, from what we're seeing on the 70's builds).
In short, I always say that there's a price that works for everything. If it's a good enough deal to outweigh the downsides mentioned above, it can make a great investment. Best of luck!
Mobile homes are obviously very different from traditional real estate. As rentals they are great for cash flow. One usually has less money in them, as a rental, compared to stick built. Those who like them are fine with the differences and appreciate several features of those differences.
As @Rachel H. mentioned the condition can be a challenge.
As was mentioned by @Bailey Oryan they usually have a much higher ROI than stick built also. Quicker to turn and depending on the state, no title company needed.
Value is in the eye of the beholder. Many people/investors won't touch them as personal property and not actual real estate. Complaints include they go down in value, not in good areas, etc. Others have no problem with cash flow and great ROI.
Tell your investor to do their due diligence if interested. Have a mobile home contractor/handyman(woman) walk thru and point out what they see that might need work until they're used to them and good luck!
@Bill Neves and @Bailey Oryan... I appreciate your insight regarding mobile homes. It is definitely an area for further research partnered with an open mind to the possibilities.
In my experience, 1 mobile home doesn't work. In fact, I started to break even after 4 units! The cash flow is great, percentage wise anyway. But it doesn't take much to wipe out months of cash flow if you only have 1 unit.
Now with 12 units, the occasional problems are only minor bumps in the road!
FYI, only 1 of my rentals are in a park and it cash flow about the same as the other 11 for now. However, those other 11 were purchased on a REC and will start being paid off in the next 2 years. Then they will cash flow like crazy!
As for appreciation, the good side of no appreciation is that you are not paying for someone else's appreciation when you buy! I've been thinking about starting a thread about MH appreciation, I think I'll go do that now.