As an active real estate investor who has been investing in mobile homes for the past decade, I have come to the realization that the one of the single greatest advantages of investing in mobile homes for long-term profit is the ‘Lack’ of affordable bank financing for qualified buyers.
Let’s start from the beginning. A mobile home is located on land you own or on land that is rented, typically known as a mobile home park. Either way, a mobile home sits on a piece of land and is lived in by an end-user. Like middle to lower-end traditional homes, there is a huge segment of society that is in desperate need of ‘affordable’ housing. Mobile home buyers want the same things as traditional house buyers; a clean and safe home in which to raise their families and grow old.
As if it was not hard enough to secure financing before the housing market collapsed, in today’s market, mobile home financing is undeniably scarce unless the mobile home you intend to buy is almost new, you have land in which to give as collateral, and/or don’t mind borrowing money at a 12% or higher interest rate.
This lack of bank financing for qualified buyers is putting a halt to the general public being able to buy mobile homes, and a virtual halt to all current mobile home owners being able to sell their unwanted properties. Although not as common as bank loans, mobile home buyers may still purchase mobile homes with all cash because one does not need bank financing if buying with all cash.
Just because mobile home financing is gone dry does not mean that the mobile home buyers have gone away. Families that would not have considered owning a mobile home five years ago are now happily moving their families into mobile homes. Mobile homes today are built to higher and higher standard while still retaining their affordability. A 3 bedroom, 2 bathroom mobile home can cost only a fraction of the cost of its 3/2 block or frame counterpart.
There are millions and millions of eager and qualified mobile home buyers still in the market waiting for a home to be sold with seller held financing.
You can be the bank!
Remember you won’t be lending any money, you are simply agreeing to finance the terms of the sale. So much money down and so much cash per month for the next 10, 20, or 30 years sounds like a retirement plan to me.
As real estate investors one of our jobs is to be the middlemen and women of real estate. We hold the knowledge that finds sellers, structures terms, and negotiates deals to then pass onto our buyers.
Know before going in to the mobile home market that the majority of the sales (both buying and selling) will be structured with owner/seller financing. This is the perfect formula for purchasing with little to no money at closing.
Let’s be honest, the mobile home market has yet to really explode. If ‘mobile home investing’ was as big a buzz-word as wholesaling, REO’s, or short sales, we would not be having this discussion; the market would already be saturated with investors.
Up to this point the mobile home market has been relatively quiet, with the same big investors dominating the market. It is only now, thanks to the digital age and with the greater freedom of education online that the masses are seeing the financial benefits to adding mobile homes to their arsenal of real estate investments.
– John Fedro