I had the great fortune to talk with some great real estate investors this week at a local REIA meeting. After the meeting concluded I hung around and began mingling with the locals, no one amazingly had ever invested in manufactured housing. I spent the next three hours regaling a group of doe eyed newbie investors about the past successes and failures while mobile home investing.
While describing the mobile home business I realized that there are so many ways to make money with mobile homes. Even within this small niche of mobile home investing there can still be multiple ways to profit.
Fast Turn: This one goes by many names. Anytime you purchase a property with the intention of fixing and re-selling it for substantial profit you are fast turning the home. Mobile homes with their easy-to-fix design and simple framework can significantly less costly to repair than traditional site built homes. Undervalued and underrated used mobile homes can be purchased for a fraction of their retail price. This may mean that you are able to purchase a newer model mobile home for only a few dollars per square foot, leaving thousands of dollars in equity for you.
“You can’t eat equity.” Mobile homes can be notoriously difficult to arrange conventional financing for. (See my past article: Mobile Home Financing) It is for this reason typically only newer aged mobiles “attached to real property” qualify for conventional financing. Selling your invest mobile home for all cash is possible, this is particularly popular in tourist destinations.
Wholesale: Mobile home wholesaling is the process of selling contracts. You are able to get Seller Jane’s mobile home under contract to buy for a steal. Since you do not buy mobile homes yourself, you call a friend who does. “Mobile Home Mitch” who loves cash-flowing used mobiles offers to pay $3,000 over the contract price for the home. You assign your contract to Mitch and profit $3,000 at closing.
There are wholesalers for everything; traditional real estate, cars, fish, flowers, REOs, and yes… even mobile homes. When “unwanted” mobile home sellers call in response to your “We Buy Houses” marketing, hold onto these leads that may not meet your criteria. They may just make you money after you give them to a seasoned mobile home investor.
Ants: Also known as “bird dogs“, becoming an ant provides a great needed service to mobile home investors. Typically mobile homes can populate a certain location or area of town. Negotiate a deal with an “active” mobile home investor, perhaps he/she pays you per qualified lead. Your job is to drive these mobile home areas, snap pictures, take notes, get addresses and jot down “FSBO” phone numbers.
(Rent) Buy & Hold: Is your dream to become a landlord? To own countless properties? To know that your tenants will be paying for your upcoming cruises and children’s schooling? Renting property has brought many real estate investors countless fortunes. The problems with rentals is that they come with their renters, and renters bring their “renter’s mentality”. Anyone who has ever dealt with children can relate to handling renters on a day to day basis. Properly screened and a thorough background check can eliminate most rental problems before they start. Also an experience property management can be worth their weight in gold.
(Owner financing) Buy & Hold: Whether you sell your investment mobile homes with a lease to option, land contract, rent-to-own, or simply create a promissory note, you are intending to sell your mobile home for payments overtime. Instead of collecting a one-lump sum when you sell your newest mobile home acquisition, you can choose to accept the purchase price in monthly payments plus interest. A size-able non-refundable down payment is usually paid to you as consideration for the tenant/buyer’s opportunity to purchase the home one day.
So remember, if you drive down the street and notice a mobile home community, take a drive through. The next time you get a half day free from work, take the kids and check out the mobile home area of town. Start looking for deals and maybe you’ll be the next mobile home superstar.