Flipping Mobile Homes...Does it work?
There's a lot of discussion about flipping houses, but what about mobile homes? I'm just starting out in real estate, but to me it makes sense (at least for a little guy like me), because there's less money invested, the finished product sells for less than a house, and there's always somebody looking for cheap living that can't or doesn't want to get a huge mortgage. Obviously I'm not talking about putting $100k into a mobile home, but maybe $2500 and sell it for $4000? Has anyone ever done this? Advice would be great!
Thanks
Marc
I would like to know this and how toassess their value. When I search them I get the value of the whole park!
#2 General Landlording & Rental Properties Contributor
The biggest problem with mobiles is your client base. They have next to no money to buy meaning you have to finance. In addition most community owners do not allow renting of homes in their community.
The reward is generally too low to warrant the effort.
We see much better numbers in the deals we do. You can get them for low dollars, fix up a bit and sell for a lot more.
Example: Buy for $500 with 2 months rent. Put in $7k in fix up money. Sell for $17k and net $9500.
As far as value - Best and most accurate way - you have to do a market analysis of your area. Need to visit parks and get an idea what places are selling for.
Good luck and have fun!
I was of the same opinion for 10 years, when I did stick built houses. I was wrong.
I tried a mobile home by accident and now only do mobiles.
The returns crush stick built returns, in most cases.
We just sold one for $89,900 cash. Closes this coming Tuesday. $26k net.
And we've sold several over the past several months for $17k, $25K, $28k, $37k ... All cash - haven't financed any of those.
Just sayin'!
Definitely! I have purchased and sold many and rent many as well. Everyone needs a place to live and some choose mobile homes. I only invest on ones attached to land. See one which was closed on January 2016 at below link - $16K Pig turned into $84,900 Pork Chop.
You need to know your market very well and have a handle on demand. The west coast may offer some different demand (e.g. buyers with 90K cash) than I would see in the south for example. That's extremely uncommon here without Seller Financing.
There are times when you can find cash buyers using bandit signs, craigslist, postlets, and more, but you need to be aware that conventional and chattel financing is usually not an option as mentioned earlier.
Your options are owner finance (and all the regulations along with it) or find a cash buyer. @Greg S. is right about quality Parks typically not allowing Lonnie Dealers, but if you have a conversation with them about making the home nice and improving the community they may give it a chance - in many cases they have been burned by this scenario in the past.
Would there be any value to buy and hold mobile homes. I've had multiple park owners tell me I'm welcome to bring trailers in and rent them out. I just don't like the idea of having to pay lot rent. Reminds of a HOA fee, but cost even more.
@Mark Devens You need to check out John Fedro and Aaron Kinney's blogs and posts about mobile home investing.They specialize in this sector and have a lot of useful information.Good luck
#2 General Landlording & Rental Properties Contributor
Kevin, mobiles are a depreciating asset and are not generally well built. They take a great deal of abuse from tenants and do not hold up well. Park owners will tell you that POHs only serve the purpose of getting tenants to cover lot rent. The income from renting the home, based on expenses, is usually a wash.
Consider most mobile home housing is extremely low income. Individuals have trouble finding buyers with $500 to put down on a $5000 home and they have no hope of ever getting financing. To be comfortably profitable flipping or buy and hold it is best to be operating in areas where the home values are up in the higher tens of thousands.
As an investor who has had both stick built flipping, rentals and mobile homes on payments. I have seen more abuse with rentals, than rent to own or financed mobile homes.
Apartment rentals in cities in my experience is lower income than mobile home owners in parks.
What have you seen?
If you are going to do owner financing it can be very profitable. It is not near as simple as it has been in the past but I know at least one person that is PROFITTING more than $500,000 a month doing it.
I would only buy ones that are attached to land. Never buy them new. Only buy them from HUD.
#2 General Landlording & Rental Properties Contributor
Bill: Tough question. Obviously it is dependant on individual tenants.
Since I do not do lease to own or finance the mobiles I sell I really have no first hand experience to base an opinion on.
Apartments and mobile homes all have a broad range of values and therefor no real base line to evaluate tenant quality.
The mobile homes I deal with sell at a reasonably high dollar and therefor attract a much higher quality owner than apartment dweller. But to be honest my home owners do not graduate from apartments to mobile home ownership most are transitioning from other types of home ownership situations. Somewhat unique.
Agreed. the last 3 we sold were to downsizing former homeowners who were simplifying things.
A nice park (the ones we work in) is somewhat like a condo. You can travel when you want, someone can watch your place and take care of the lawn and landscaping, if any.
We're in Phoenix for 3 months doing that exact thing. I know, poor me.
I can answer this. Very lucartive. We have investors that have done well with these. I want to be clear. They have switched out the homes. In other words taken the old home of the foundation and replaced with lightly used or new. Great spread here in CA
I'm interested in this opportunity. So instead of remodeling one it would be inexpensive to just replace witha new one? Jeez these things wear out like a pair of shoes huh? How is that a flip then?
If your willing to take back financing with a down stroke, you can make a good residual income......I suggest rent to own if the regulations allow it. That's what i do and it makes it easier to get the non payers out easier so you can turn around and rent to own it again.
I had a mobile home that I bought and moved into a small town around me........I probably had around 10 thousand in it and I swear I sold and resold that trailer on a rent to own with $2500 down 8 times with over a 20 year period.
Generally people that live in mobile homes seem to always be one paycheck away from disaster in all aspects of their lives.....this means that Divorce, job loss, drugs, problem kids. etc.....seem to happen to these nice people frequently. I know this because I have experience in mobile home parks.
What this means is you will probably get the house back many times to fluff it up.....figure some new terms and re sell it.
If I told you how much money that old trailer house put into my pocket over the course of time, you would think I'm lying. Believe it or not its final fate ended with a tornado that obliterated it.....the tenants wanted nothing to do with the mess so I bought the land back from them for very little, fired up the cat and cleaned the yard up and resold it for double what I gave for it...(take that California:)) What is a lot worth in Beaver Crossing, Nebraska, (look it up, I'm not joking,) 20 years ago????
I paid $2500 dollars for it when I bought it and sold it for $5000 when the head hunters came to town to buy up lots in the destroyed town. Probably could have got more but didn't want to get greedy...:) I would have kept the lot and bought another trailer house to move in so I could start the money machine again, but the village decided after the tornado that no individual mobile homes could be brought into the city anymore. Only houses with a foundation would be allowed. That was my sign to exit stage right.
People would literately thank me for taking the house back with no repercussions with only a short time left till payoff just because they were so upset with their current bad situation.....crazy...
Great insight. Thanks for sharing.