If you missed my other post. I am new and will probably have a few questions while I am studying and analyzing deals the next few days. One question I have right now is whats the down side to buying mobile homes for buy and hold rentals? They seem to good to be true. The only thing I can think of is because they might not appreciate like a normal house does? or maybe you cant get as much for rent in a mobile home as you can a house? Whats the deal? As far as cash flow goes they seem like a no brainer. I have found some very reasonable 3/2s and 2/2s compared to houses their same size. When I calculate the numbers they seem to be a pretty strong GO, but like I said I am learning and am a little skeptical when something seems to good to be true. Would like to hear some input. Thanks!
I can buy single wides for 20k-40k. What look like pretty nice ones if not brand new. Why not just buy them and put a loop around driveway on land I own and keep buying and adding to the collection? Surely I must be missing something or everyone would be doing this. Could someone explain what I am missing? thanks
I've been in the mobile home business some 10 years. I once owned a 50 unit mobile home park. I also managed other family owned parks. One thing I have to say about mobile homes is the up keep as they age. Roof issues, siding issues, leveling issues, HVAC issues and especially tenant issues. We have experienced that most tenants don't take care of thier mobile homes. You really have to stay on top of them, especially in your area when it comes to winter. Frozen sewer pipes and water pipes are always an issue. You have to be sure you winterize all the exposed pipes before winter sets in. We have had fires with electrical pipe wrap products. Another issue is trash around mobile homes, tenants don't seem to care about how much stuff is thrown around thier home, they don't pick up for themselves and un-registered cars seem to follow the mobile homes.
On the good side, I have purchased used mobile homes, rehabbed them and sold them owner finance. Much better way to go then owning them. You get a monthly check on the loan and lot rent to boot. And you don't have to deal with trailor issues. We have purchased country houses with 3 acres and installed mobile home pads and extended utilities and rented out the lots with the house. Three mobile homes and a house on three acres. Lot rent at $275 times 3 = $825 add the house rent at $1,200 = $2,025 monthly. Then if you purchase 3 mobile homes under $10,000. Rehab them for under $5,000 and sell them at $20,000 with $5,000 down at 6% amortized at 25 years gives you about $166 per month. Add that to the lot rent $166 + $275 = $441 x 3 = $1,323 plus the house rent $1,200 = $2,523 per month x 12 months = $30,276 yearly. Then each year you raise the lot rent by $10.00 monthly if the market allows.
Now repeat this 10 times over the next 10 years and you become well off for the rest of your life.
Mike, That's interesting. Thanks for sharing.
How difficult is it to extend the utilities in terms of zoning and costs?
Zoning is the number 1 issue and utilities is the other. My suggestion is to talk to a RE atty in your area or, if you have the time, go down to the city yourself and see what restrictions they may have. Alot of times, if you are outside of an incorporated city, zoning pressures are less.
Hooking up to electric (separate meters) as well as waste water (city or septic) and figuring out separate or one meter for water (sep bill or inclusive) is another issue as well as land features and leveling pads.
Another aspect is maintenance. Mobile homes is a different animal compared to SFH. You need to find a person competant in mobile which will cut down your mistakes and save you money.
That is why not everyone paves a driveway and sets mobile homes on it- it takes work and planning- good luck
@Jacob Knowles can you fly some of those lobsters out to ORegon.. ?
I have owned 4 MHP's and a few stand alone... I love MHP in great areas of the west coast. as they are just money... but the idea of just creating pads is not something we could do without going through the full blown planning rituals.
MH though as stated above are much tougher to maintain as the parts are not something you just run to home depot for...
Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222
Look into a zoning designation such as RR Rural Residential. It usually allows mobile homes and may allow up to 4 mobile homes without being considered a mobile home park which would fall under an entirely different set of regulations.
To extend water and sewer you have to test for gallons per minute water flow in existing wells and for sewer you have to contact the town engineer for regulations on size of septic serves that handles a number of families connected to the system.
We had to install another well to handle 4 families and we had to install a sand filter attached to a septic tank to accommodate a leach field for 4 families. You need 3 acres minimum for 4 family including the lots.
And as for electric service we installed separate meters for each lot, wiring placed under ground, permits and advice from the local electric company and town.
If you add the MH's to existing property out in the country. Don't forget to consider your eventual exit strategy. Maybe 5, 10 or 55 years down the road. I would ask myself... How can I sell this property? Does someone want to buy a home out in the country and look out their front or back door and see a mobile home park?
I would rather buy nice used homes if possible and not purchase them for $20 or more. Either way, once you are finished with your income from the mobile homes sell the wholesale and moved off the property. In my area I can buy very nice used homes for $10-$14K. You may not be that fortunate in your area.
When we were saving up to 'build our RE empire' lol I lived in an '82 doublewide for a few years. It was just kind of tinny. 3/8 drywall more easily hole-prone, cabinets made out of particle board with no top or back, hollow-core doors with cardboard 'struts', 2X2 stud walls, poly plumbing. plastic washerless faucets,etc. Throw an apathetic renter in there and you are fixing major stuff weekly!
I used to buy mobiles cheap for cash and sell on paper to the owner-occ. Not sure how Dodd-Frank and the SAFE Act would play into that these days. The percentages were great, but I wouldn't rent out older mobiles for reasons stated above. Good luck @Jacob Knowles !
@Steve Vaughan DF covers mobile homes... but of course many will just choose to ignore DF....
I just bought one in Eugene a few months ago.. low end tweaker ville.
4 are worthless and going to the dump.. 3 tenants evicted first month.
and we are metering the water the old owner provided water and that is what crated the opp for us... one of the tenants she could not get rid of would just turn on the water faucet and let it run.. by the time we bought between a staggering water bill that had to be paid and all other manner of city fines it cost her about 40k from her proceeds.
But we will get it turned around first thing we are doing is sub metering there is some sort of wireless product out we are going to try.
Re train the good tenatns get rid of the riff raff then resell in 18 months or so ... so we can take cap gain instead of ordinary income which is what we usually and if it really turns around and gin's cash we may keep it for a few more years.. we will see.
I owned a great on in Vancouver WA... it was just shy of 50 spaces and it was a dream to run... I do not recommend anyone to own the coachs if you can help it.. As stated above they are built so cheap tenants break crap left and righ.
Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222
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