Who is buying up the mobile homes near you?
This article was originally to be about market saturation concerning mobile home investing. However, while researching this topic, it was clear that before we can understand “market saturation” we must first identify our “competition” while investing in mobile homes either inside pre-existing land-lease communities or attached to private land we own.
Below is a short list of people/companies that may be competing with you in your area. These competitors want to lock up or purchase mobile homes before you can help these sellers and provide them alternative options. It should be your goal to reach every seller as quickly as possible. Aim to become well-known in your local market concerning mobile homes.
The 6 Types of Mobile Home Buyers Investors Compete Against
Buyers With Cash
Threat Level: Moderate
Mobile homes are purchased and sold daily around the country. A majority of these “private seller to private buyer” transactions are all-cash type sales. With that said, this buying demographic is not the majority in any marketplace. The number of buyers with $5000, $10,000, or $50,000 cash pale in comparison to the number of buyers that keep little savings and instead would love to arrange monthly seller-held financing payments. Said another way, cash buyers are few and far between in many markets around the country. Regardless, with proper marketing and an attractive purchase price, an all-cash buyer may absolutely be found for most any mobile home.
Buyers With Approved Bank Financing
Threat Level: Varying
These days, there are a number of lending programs for mobile home buyers in parks and on private land. Programs vary state to state. Due to lending restrictions, many buyers will not qualify or feel that they will not qualify and simply continue renting. In reality, if you are looking to sell a newer manufactured home, then bank financing may absolutely be an option for your buyers.
Related: 7 Advantages to Working With Mobile Home Builders and Dealers as an Investor
The threat level of buyers with bank financing may vary because of the different types of mobile homes you typically wish to purchase and resell/rent. If you only wish to invest in 4 or 5-star homes in 4 to 5-star parks, then these nicer homes will attract a larger percentage of bank approved buyers. However if you intend to invest in lower-end and moderately attractive parks, you will likely not run into many buyers interested in acquiring bank financing.
Pro Tip: Educate yourself by calling around to nationwide and local manufactured home lenders to find out their lending requirements, lending criteria, and next steps.
Threat Level: Varying
Compared to single-family home investors, there are not many real estate investors interested in manufactured housing. Whether you only know a handful of mobile home investors or absolutely zero mobile home investors, this represents the norm around the country. Many investors simply turn their noses up to this type of real estate or ignorantly dismiss a mobile home’s potential.
Additionally, within the niche of mobile home investing, there are other sub-niches to focus on, such as handyman specials, senior citizen homes, co-op style parks, rentals, REOs, HUD homes on land, and many other areas of specialty to possibly profit from within your local market.
Real Estate Agents/Broker Companies
Threat Level: Zero
These companies do exist; however, they are not the competition — they are a “fair and competitive market.” After speaking with many dissatisfied sellers, it seems many realty companies exert little effort and produce few walk-throughs for a seller’s home. As mobile home investors, we may wish to regularly encourage certain sellers to list their manufactured home properties with a real estate agent if in their best judgement to potentially receive a higher purchase price. Our goal as investors should be to see sellers get the best offers that fit their needs and selling timeframe.
Pro Tip: You make sure you or your advertising message get to sellers before they call or get called by any local realty companies. In some areas, there will be zero real estate agents or companies interested in these homes.
Buyers With Payments
Threat Level: Varying
While this is a reality, it is not a concern in most markets. As investors, we may often sell via monthly payments as a business. However, private sellers and private buyers working together typically does not happen. Interestingly, experience has shown that more than any other group, Hispanic owners/sellers may choose to advertise a payment-plan in addition to an all-cash sales price. This “payment plan” offer is typically a slightly higher purchase price over the all-cash sales price. Only in these areas do we mobile home investors begin to lose some of our edge.
Mobile Home Parks
Threat Level: Minimal
On some occasions, the seller’s own mobile home community will offer to purchase the unwanted mobile home. In some park lease agreements, the management may even have “the first right of refusal” to purchase any mobile home inside its walls. A park will do this to protect the home from being removed from the community and/or to resell the home for a profit. From experience, many mobile home parks will only offer many sellers pennies on the dollar compared to what their home is really worth. Keep in mind that while a park manager is only a short distance away, selling a mobile home to a park is usually a seller’s last resort. One exception is if the park has sold this home to the seller and the seller has defaulted on payments to the park. In this case, it would be easier for all parties if the park simply takes back the home.
In conclusion, don’t let other people stop you from succeeding. Your purchase offers and cash are just as good as anyone else’s. Remember that in most areas of the country, there is a healthy supply of mobile homes and mobile home owners in need of some help. Many mobile home investors need only one deal per month to stay busy. Check in next week as we uncover what these figures look like around the country and how this all relates to your mobile home investing business. Until then, keep reaching out to new sellers and keep making offers.
Mobile home investors: Who do you see as competition in your market?
Let me know with a comment!