Last week, I was able to respond to a mobile home investing question that read, “Am I able to purchase a mobile home that needs repairs and resell the home for a profit without making any of the repairs on the home before reselling?”
The short answer is yes, but let’s dive deep into this question and answer to find out why this is and how value is created with regard to mobile homes.
First things first, let’s make sure we all understand that in order to grow a long-term investing business with great word-of-mouth advertising, you may only buy/sell win-win mobile home deals. This means that although the condition of the mobile home may not be five out of five stars, the price and terms are affordable and attractive to the end user. In no situation should an investor omit repair information or fool a buyer into buying a misrepresented mobile home. Now that we are in agreement there, let’s move forward.
How can you create value with mobile homes? I’ve listed a few methods below.
5 Ways to Add Value to Mobile Homes Without Swinging a Hammer
1. Make improvements.
Perhaps the most commonly known of method to increase the value of a home is via repairs, improvements, and sweat equity. If a mobile home is worth $5,000 with repairs needed, then likely making some or all of the needed repairs will justify a higher retail price once completed. This is a common method of increasing value that most investors understand. However what other ways are there to increase value of a mobile home?
2. Move the mobile home to a more desirable location.
If the mobile home is inside of a park and the cost to move the mobile home fits into your figures, this may be a valid way to increase value of the mobile home. Perhaps you are moving the mobile home from a rundown park to a five-star park, or perhaps you are moving the mobile home from an inland small town park to a bustling oceanside community. Both of these moves will typically create a higher resale demand and therefore a higher resale value, equaling profit for you.
3. Add more mobile homes to the land if possible.
If you own a mobile home on land, then perhaps the zoning of the land and the size of the parcel allows for additional mobile homes to be added to the property. In many cases, this can increase resale value and cash-flow potential.
4. Sell via payments.
When buyers cannot or will not turn to banks or credit unions to finance their used manufactured home purchase, then selling via payments* may increase the sales price you may charge from your payment buyer. Said another way, no matter how you purchase a mobile home, when you resell the home for monthly payments, you increase the amount of buyers interested in the home. This increase of demand will typically increase price, in addition to allowing you to charge a premium for this service.
*Selling on payments is a vague term that includes lease options, rent to own programs, owner financing, and other methods. Some of these methods are frowned upon, and others are illegal in many areas without proper underwriting. Selling via payment is still possible, but please make sure to follow all laws and rules when selling via payments or terms of any kind.
5. Find and purchase mobile home property below retail price.
If you were paying attention above, you may have realized that we really have not discussed the original question’s answer yet. Can we buy and resell a mobile home without making any improvements to the home? Yes, and this is made possible by the act of finding and securing the subject mobile home (via purchase or obtaining a signed purchase contract). As investors, much of our job is to attract, find, negotiate, and secure a “profitable” mobile home, typically undervalue of the retail price. Realize that once you find and buy a mobile home below value, you have captured this value immediately. Aim to help as many local mobile home sellers and parks as possible starting today.
Any other tips you’d add to this list?
Leave your comments below!