Mobile home investment

18 Replies

Hi y'all!  I want and need YOUR opinion. There is a mobile home across the road from my mom, has been sitting empty for about a year now, the people that own it lived there for a long time and own free and clear. I heard they were asking $3,000, motivated to sell because they have to keep up on the lot rent $300 mo/. This would be my first investment, was looking to buy and hold it for a long time. Rent it at $650 includes lot rent and have a $350 positive cash flow. The place does need power washed on the outside, a small piece of skirting and back steps. No big deal. 

What are your thoughts? 

Thank you! 

That is a terrible deal. Maintenance, insurance, taxes, vacancies, etc. will be far greater than $350 per month so you will have negative cash flow on a building worth practically nothing.   

I can see where that would be a hassle. 

I'm pretty positive I can get it for less than $3k. So it's a possibility that I could turn around and sell it on a land contract. what's your opinion about that? 

thanks for your time!

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@Brandi Bryan What year is the mobile home? As for renting I will give you my 2 cents worth so to speak.  First off before you do anything, contact the park that it is in and find out if you are allowed to rent the trailer out.  Some parks will allow it and some don't.  If they don't then maybe you could buy and then sell but that has issues on it's own as well that I won't mention since your looking at renting.  

There are a lot of people out there that hate mobile homes or think they are junk and not worth the time.  There are also people that think they are cash cows.  Ideally the best way it to have it on it's own land but there are lots of people that have them in parks also.  

With that said, I own 4 in parks and 1 on it's own piece of land at least for mobile homes.  I want to think I actually do pretty well with the cash flow.  Mine vary from $425-600 cash flow after lot rent.  All of mine I have bought and fixed up as well.   Some won't need anything done to them for years hopefully and some will need some outside repairs soon.  If you have a decent mobile home and watch the condition and keep up on the maintenance you should be good.  They are not that much different that a house if you are dealing with newer homes.  If they are older then you might have some issues but nothing that is not fixable usually.  The lower cost to get into them is what makes them appealing to people and if they can cash flow good numbers then they can work.  I don't have any problem keeping them filled either.  

I guess I look at it like, if I can buy a SFR for $100K and I am lucky to rent it for $1000, that is 1%. If I can buy a mobile home for $15K and rent it for $650-1000 that sure sounds good to me. Every market is different as well. Some places it works good and some maybe not so much. For your low investment it sure might be worth a try depending on what it is and condition. Heck even the older 1970's stuff here brings good money. Best of luck.

Forgot to mention.  I would research into on doing land contract/contract for deed, etc.  That used to be a viable option but not so much anymore since the Dodd Frank and the Safe Act.  Search here on BP for tons of info on that.  

This can be a good deal, but personally I would not go the buy and hold rental route. Depending on the park and possible ARV, I would try to get them down to $1500-$2000. Put in a bit of sweat equity and try to sell it for the going rate in the park. Usually that's going to be 15K or more for a rehabbed mobile, depending on specific park and your area.

Instead of treating it as a rental, sell the home and hold the note. You get the monthly payments for 5 years, you are not responsible for lot rent and you reduce your liability for fixing things that go wrong with it. At that point you are simply "the bank."

That's what I would do.

I'm alittle confused. If they sell you the home then you would owe the lot rent not the people selling you the home. It sounds like this a mobile home park, which if this is the case most parks will need you to qualify the tenant. Best case is to buy the mobile home on payments, say $300/mo for 10 months. While you are making payments, re-sell it to someone owner finance for higher purchase price and interest. I would wait to transfer title and ownership to the new owners until after they finish making payments. Just make sure they pay their yearly taxes and are paying their lot rents.

Thank you everybody for your time and advice. I am going to try and purchase the home for less than 3k. It is in a trailer park, I know who owns the park, so I dont think it will be an issue. I will put a little sweat equity into it and turn around and sell it for more. I will just play the "bank" roll part.

Thanks again! 

Thank you everybody for your time and advice. I am going to try and purchase the home for less than 3k. It is in a trailer park, I know who owns the park, so I dont think it will be an issue. I will put a little sweat equity into it and turn around and sell it for more. I will just play the "bank" roll part.

Thanks again! 

Definitely get in touch with park manager. If you can get on their good side and build a relationship, they'll usually open up to you and tell you things you may not know. Many times, there's more to the story. Good luck! 

@Greg 

@Thomas S. there are many hundreds of us doing those "terrible deals" as you call them and making a fine living at it. I transferred my buy and hold single family home business to the mobile home space and am a much happier camper. Maybe it's not for YOU, but passing your prejudices along to new folks might not be the best way to respond. Insurance and taxes on a MH are negligible, and if one sells the property on a note, maintenance isn't an issue either. Vacancies are part of the package, but when they're buying rather than renting, it's much less of an issue. Rather than telling someone it's a "terrible idea", maybe just mentioning the caveats would be a more positive way to respond. Just my two cents.

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Buying mobiles is not a terrible deal. Buying that home with the intention of renting it was a terrible deal. The numbers do  not work based on expenses. Making a positive response to a negative situation is deceptive.

$650 rent, $300 lot rent does not equal $350 positive cash flow.

Any park owner will tell you that expenses in carrying a home will eat up the majority of profits.

As for seeking ways to be more positive, not the way I work. I have no desire to gloss over the realities. Money is money and has no feelings. I give my opinions and expect everyone to be intelligent enough to educate themselves and determine for themselves what is best. If you believe this is a good deal say so and point out why.

If you have similar deals that cash flow X dollars say so.

Rather than directing your comments toward me you should have directed them to the OP. My opinion should be irrelevant to you. Sell your business model rather that waste time trying to convince me I am wrong. 

Something small. $650 would INCLUDE lot rent, which is $300 so, $350 would be a positive cash flow, I am not taking that route anyways. Now at a selling point, it will work. Either way renting or selling, i will find a way to make it work.

I'm sorry you didn't understand that part. 

Thanks for your time.

@Brandi Bryan just be cautious when something is so cheap that it is almost being given away. There is often a reason. Whether it is a house or trailer, once you buy the property, you own the headache. Lets say for example the trailer is falling apart. You cannot just walk away from it. The park wants their rent and your only option is to sell it or pay to have it hauled away. I am not sure if you have ever heard the term white elephant? A white elephant is something that costs more to maintain than the value it gives you. Be careful of white elephants. 

I have not seen the property so I am just making a general statement based on the very low price. 

I understand joe, it is pretty solid on the outside, I have only been able to glance the inside, I left the owners a note on the door to give me a call, they're never there. So I am sure they want the headache gone. I definitely plan to check the place out with a fine tooth comb as soon as I can get inside. 

I have not heard that term, I like it, thanks for the heads up!

Thank you joe!