What Does an Ideal Mobile Home Investment Look Like?

by | BiggerPockets.com

As with many forms of used real estate investing, there is no cookie-cutter way a used mobile home investment should look. There are opportunities that look similar on the surface, but sizes, repairs, motivations, time, location, and resale price/terms may all vary from deal to deal. With that said, the below article gives a breakdown of some of the various mobile home investment criteria to see which are most important for you as an active mobile home investor.

What Does an Ideal Mobile Home Investment Look Like?

1. The Home

Size: The size of the mobile home certainly matters. In many areas around the country, a double wide mobile home will be more desirable than a single wide. Additionally, the more bedrooms a mobile home has, typically the better. These bedrooms should be a decent size to fit a bed, dresser, and nightstand. With that said, for the right price/terms, a smaller mobile home investment may be a substantially profitable deal.

Age: The age of the mobile home certainly matters when purchasing the home and when reselling. Many banks/lenders have underwriting requirements that will not lend on a mobile home older than 10, 15, or 20+ years. Most buyers would prefer a newer home compared to an older model mobile home. Older mobile homes can oftentimes be narrower, be built with cheaper materials, and contain older floor plans with closed off kitchens versus big open “great rooms” that feel more modern for buyers.

Condition: Condition and price go hand in hand. Typically, the better condition a mobile home is, the more expensive the home may typically be. Most end-buyers looking to purchase a used mobile home want to move in immediately and start living. This means your final product mobile home should be completely functional and ideally clean when you go to resell. When you purchase a used mobile home, it may need minor or major repairs. If you are just starting your investing career, it may be wise to invest in mobile homes that need less than $3,000 in repairs and pass on major rehabs for the moment.

Related: How to Overcome 4 Common Newbie Errors When Mobile Home Investing

Price: Typically the lower you can purchase a mobile home for, the better. The more you can sell it for, typically the better.

2. The Location

Park or Not: If you buy or sell a mobile home attached to private land, you will also typically pay for the land the mobile home sits upon. Purchasing the land will likely increase the purchase or resale value of your property significantly. Depending on your market and available capital, it is important to know what type of mobile home properties you will be starting to invest within.

Aim to help sellers of both/either mobile homes inside pre-existing communities or located on private land. Both types of sellers may be motivated to make a deal.

Size of the Park: In general, this makes very little difference when buying or reselling. All parks can be owned and operated very differently. There are some large parks that are helpful and nice, and there are other large parks that are greedy and selfish. There are also small mobile home communities that are friendly and cozy, while some small communities are dangerous and undesirable. Therefore, the size of the park that you will be purchasing and reselling a mobile home within typically doesn’t matter. Do make sure the park is friendly with who you are and how you plan on investing within their community walls.

Locale: Locations certainly do matter while investing. You will ideally be investing in a growing town, not a town that is experiencing a mass exodus of people. If you sell the home for all cash, you will want to make sure your mobile home is located in a very desirable area. However, if you sell via owner financing or rent the mobile home, you will find that potential residents will not mind commuting an extra 30 minutes or more to live in one of your properties.

Aim to confirm the land the mobile home sits on is dry and solid. Look underneath the mobile home to see how secure the foundation is and whether the mobile home is sinking into the ground at all. Also look for low-lying areas where water can accumulate during rainy seasons. It may be wise to avoid mobile homes in these specific spots.

Park Grade: Let us hypothetically grade a neighborhood or community with a one-through-five star rating—one star being the worst mobile home communities and five stars being the cleanest. I know from first-hand experience there are opportunities and value to be created in all five grades of communities. There are also advantages and disadvantages when working with a cleaner park versus a more run-down community. A five-star (beautiful park) will typically have higher monthly lot rent and a stricter application process compared to a one-star (ugly park). With that said, the “grade” of the park does not matter as much as the acquisition price/terms. If you purchase a mobile home safely and correctly, in most parks or areas, it should be profitable with a well-planned exit strategy.

If you are planning to resell a mobile home for “all-cash,” it may be wise to be within a nicer park versus an uglier park.

Restrictions: Some mobile home parks or privately owned mobile home co-op communities will have restrictions as to who may buy and resell mobile homes within their community. Some common restrictions are age-related and/or pet-related. When looking to purchase a mobile home inside a pre-existing community, aim to work with communities that have minimal restrictions. You ideally want to be able to rent or sell your investment property to as many potential buyers as possible. With that said, please keep in mind that when homes are purchased correctly, there may absolutely be value to create in more restrictive types of communities.

Price: Typically, the lower the price, the better when you’re purchasing. Additionally, if you can structure a deal with the seller to pay them their equity in monthly payments, this may be mutual beneficial, allowing you to bring less cash to the closing table.

3. The Sale

Cash/Bank Financing: Local and nationwide lenders all have various criteria with regard to who they will lend money to and what mobile homes they will lend money for. If you are looking to sell a mobile home, it may be wise to reach out to local credit unions, banks, and nationwide lenders to find out if your particular mobile home is financeable and for what rates/down payments.

mobile-home-exterior

Related: 4 Reasons Mobile Home Investors Have a Natural Edge in Many Markets

In many markets, selling a mobile home to a cash buyer may prove difficult. You may be competing to sell your mobile home for all cash with every other mobile home seller trying to sell their homes for all cash to a finite amount of qualified buyers with available cash.

Seller Financing: Properly and safely seller financing your mobile home to a qualified end user will typically give you the highest resale price you can comfortably charge. When seller financing, you will have to wait many months or years to collect the entire price of the property. When selling via owner financing, you typically open yourself up to more potential buyers, any of whom must be properly screened and qualified before moving into your property.

Renting: Many of us understand renting already. While renting, you can continue to own the property and wait to resell it later. This may be beneficial when you are also holding the land the mobile home sits on. You may capture appreciation from the land as the value rises. Keep in mind that many mobile home parks will not allow you to rent, sublease, or sublet a mobile home in their community.

This article skims the surface of some of the different criteria and qualities different mobile homes possess. In reality, there are many more differences and criteria to understand before safely and logically investing in used mobile homes regularly.

Do you have a mobile home related question?

We’d love to hear it below.

About Author

John Fedro

John Fedro has been investing in manufactured housing since 2002. John now spends his time continuing to build his cash-flow business in multiple states while helping others enjoy the same freedom he has achieved. Find John here.

8 Comments

    • John Fedro

      Hi Tim,
      Thank you for commenting and reaching out. You definitely sound like a knowledgeable and seasoned investor that is not making a negative blanket statement across an entire asset class. I totally agree that there is absolutely zero profit or value to be made by investing in mobile homes and helping local buyers, sellers, and parks. Anyone who invests in mobile homes for any reasons, even with proper due diligence is probably out of their minds or not-smart as you mentioned above. In fact, working with mobile home investors and being a mobile home investor for the for the past 15 years has taught me that there is definitely something a little different and unique with us real estate investors who focus on investing in manufactured housing. Thank you again for commenting and pointing out this obvious truth. It is great to see that the negative stigma of mobile homes still exists. This absolutely helps us to scare off other investors and people who may be competition. I encourage you to continue purchasing individual single-family properties and helping local buyers and sellers. I have no doubt your success has come from hard work and daily effort. Keep up the great work and daily effort moving forward. As always, if you ever have any follow-up questions or concerns never hesitate to reach out any time.
      Talk soon,
      John

  1. Brit Baldwin

    Hi John, interesting article on mobile homes. I am at the wannabe investor stage and have been bouncing all over the field of asset classes. Commercial multifamily has a lot of appeal…and a whole lot of dollars that go with it. Being a brand new investor, not likely that I could find success there without a power partner.

    Wondering if you have done any mobile home park type of investing rather than individual units. Again investing in the whole park is a bigger step than a single unit. Chalk that up to the fact that I am not starting in my 20’s like so many of the brilliant diligent folks here on BP. In my 40’s with a hunger for financial independence and trying to get a big start in real estate investing. Thanks in advance!

    • John Fedro

      Hi Brit,

      Thank you for reaching out and connecting. After being in the real estate niche for almost 2 decades I can tell you that a lot can be accomplished in just a small number of years. I mention this because even though you are in your 40s, you still have a number of decades to build wealth and financial freedom. With that said obviously doing this sooner rather than later would be ideal. Great job being hungry and not afraid to pull the trigger. With regards to your question, yes I am now also involved with purchasing and investing in entire mobile home communities. With that said I have only started to invest in entire parks in the past few years. I have much more experience and knowledge when it comes to buying and selling and holding the individual mobile homes inside parks and attached to private land. With that said if you have any mobile home park type questions never hesitate to reach out any time. There are definitely people on this website that have much more experience when it comes to purchasing/holding the entire mobile home communities, however I certainly will aim to help whenever possible. Feel free to keep in touch as needed. Moving forward keep learning and aiming to pull the trigger sooner rather than later. Keep in touch.

      Talk soon,
      John

  2. Dennis Johnson

    How do you sell once your unit is ready?
    I had a home in a over 55 community in Florida with their own sales team. This is a higher end community with a tough pre-sale background check. There was no ability for “drive by” buyers as it was a gated community. The unit I had was priced to market and I went through a three month ordeal with an outside agent because I thought I could do better than listing with the park owner sales team. I finally went with them and sold at a break even price on my purchase cost with re-hab cost. I actually lost money because I still paid lot rent and insurance as the unit sat empty for six months while waiting to sell. The unit was shown on realtor web sites and MHV.
    I just find it very difficult to get a unit sold in these communities..any thoughts on what I might do different.

    • John Fedro

      Hi Dennis,

      Thank you for reaching out and connecting. Congratulations on pulling the trigger and investing in this mobile home in a senior community. I’ve no doubt that the effort it took to rehab and resell the property required a good deal of hard work and daily effort on your part. Great work in all of this. I mention this because it certainly sounds like there was an uphill battle. I mention this because of the park being a gated community, only allowing 55+ people to live in the community, having a seemingly strict background check, and then having to sell for cash or bank financing can all be challenges by themselves let alone combined together. With all that said I am very glad to hear that you were able to sell this home and get out without losing too much money or having a bad taste in your mouth.

      When purchasing mobile homes in senior communities we have to keep both eyes very open and really go through our due diligence completely. That is because mobile homes and family parks and mobile homes in senior parks are two completely different types of deals. That is because the buyers and sellers and often times entire communities are a bit different in their mindsets, wants, and demands. With that said, this last sentence might be a bit vague as I am not really explaining what the differences between these two types of communities are.

      I do certainly have thoughts with regards to what you may do differently in the future. I would encourage you to purchase your next few properties in all-ages communities. These may be a little further out of your immediate area however I do encourage you to get to these areas and drive through these communities. You may also invest in senior parks however make sure that the application processes are relatively easy, the lot rent is average, there is a demand from buyers to be in this area, and you are purchasing the home very much under market potentially with some months of free lot rent moving forward. In short, when purchasing in senior communities really have to stack the advantages in our favor. This is because it may take a number of months to sell a home in a senior community. Please keep in mind the different areas around the country, or even area to area within Florida will vary in the popularity seniors have for the communities. For example, one mobile home park may cater to seniors and be very popular while down the street a few miles there are other mobile home parks for seniors that have vacancies and are not as popular. It is important to know all of this before purchasing and making offers on any mobile home anywhere. I have a thought that this reply may be a bit confusing or may bring up more questions than it actually answered. Moving forward if you ever have any follow-up questions or concerns please never hesitate to comment back or email me directly. All the best. Keep in touch.

      Talk soon,
      John

  3. Rick Wang

    Great article, John. This is the first one I read and I enjoyed it so much I clicked on your name and to my delight saw many more articles you’ve written. I just finished reading your $695 article and will read more. Thanks.

    Rick

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