7 Ways to Invest in Mobile Homes With Less Than $25,000

by | BiggerPockets.com

It is hard to believe that the number one reason real estate investors start buying/selling used mobile homes is not the glamour and prestige. Many real estate investors begin purchasing, holding and/or reselling used mobile homes in parks due to the low perceived capital needed when getting started. While getting started investing with more cash is arguably better than starting poor, you may only need have a few thousand dollars to begin investing safely in used mobile homes inside pre-existing parks.

Do You Have Less Than $25,000 Available?

If you have less than $25,000 cash, it is safe to assume you will eventually exhaust 100 percent of your savings if you purchase and hold all mobile homes for rent/cash flow. It may take weeks or months to collect enough profit to purchase the next set of investment homes.

Let’s avoid you running out of money while building up your cash flow business. If you are aiming to build a mobile home investing business with less than $25,000 to start, you will be doing the following.

1. Save as much of your incoming capital as possible.

Continue saving money from your other income sources to invest towards your real estate investing businesses. Remember that a successfully running real estate investing business should be converting some of your bank savings into long-term cash flow and/or bigger paydays.

Practicality rating when starting with less than $25,000: Very practical. Do this for sure.

mobile-home

2. Reinvest profits.

This is something almost all investors must do to continue operating an active and successful real estate business. Mobile home investing is no different. When starting with limited capital, you may wish to invest 100 percent of your profits back into your real estate business.

Practicality rating when starting with less than $25,000: Very practical. Do this for sure.

Related: Should I Invest In Mobile Home Singlewides Or Doublewides?

3. Use seller financing when buying.

Many sellers simply cannot accept payments when selling their manufactured homes. Some sellers may require a 30+% down payment from you before agreeing to owner financing. Some sellers may be much more eager and compromising, requiring only little down and low monthly payments. Aim to ask all mobile home sellers about purchasing their homes via some degree of seller-held financing. Using this method, we are oftentimes able to pay a considerable amount more for a home versus an all-cash purchase price.

Pro Tip: Spend time understanding the sellers’ wants and needs before making purchase offers. A seller will tell you their “wants” within the first 10 seconds of meeting them. In order to find out their “needs,” you must spend time getting to know them and learning about what is going on in their lives and where they are moving to.

Practicality rating when starting with less than $25,000: Very practical when possible, depending on the sellers’ needs.

4. Consider private money.

Friends, family members, other investors, and acquaintances are all examples of people who may be unhappy with their current rates of returns from banks, stocks, etc. These folks may consider lending you some money to gain a better return on their savings.

Practicality rating when starting with less than $25,000: Semi-practical. When getting started, few people may invest in you without a track record of proven successes in the field.

5. Try out capital partners.

A business partnership can take many forms. Perhaps you join forces with a silent partner only when you require extra capital, or perhaps this is a full-time partnership providing you capital for every deal. Remember that the investor taking all the action and creating the deal is likely the most valuable player.

Practicality rating when starting with less than $25,000: Practical, but be aware. Always have clarity with any potential partner. Understand everyone’s roles, duties, and expectations on a day-to-day, week-to-week, and year-to-year basis.

cash-flow-rental

6. Sell mobile homes for all cash.

Sell mobile homes for cash to raise money for future deals. Cash buyers want a great deal for their money. Depending on the time of the year and area of the country, selling a mobile home for all cash may be easier said than done. When selling a mobile home for all cash, you will be competing with almost every other mobile home seller looking for a local all-cash buyer.

Practicality rating when starting with less than $25,000: Semi-practical depending on the home, condition, location, and time of year.

Related: Just Purchase a Mobile Home Inside a Park? Here Are Your Next Steps!

Pro Tip: When selling a used mobile home to an all-cash buyer, aim to at least double your invested capital.

7. Use credit cards, HELOCs, or banks.

Credit cards provide cash advances, and Home Equity Lines of Credit provide liquid cash to millions of homeowners across the country. However, borrowing money to fund your real estate business may not necessarily be prudent.

Practicality rating when starting with less than $25,000: Not practical. Borrowing money to begin your investing career is a slippery slope. One reason for the risk is the small margin of error with regard to mobile homes inside parks. If you are just now beginning to invest, it is almost certain you will make many foolish/valuable mistakes while getting started and growing your portfolio. If you are using your own money, then these are simply valuable lessons learned. However, if you are using borrowed money, you will pay for these lessons for many more months to come every time you make a monthly loan payment.

Do You Have More Than $25,000 Available?

First things first, great job collecting and saving this amount of capital. Just because you have this money does not mean you should spend it all in one location. From firsthand and secondhand experience, this $25,000 amount can purchase you at minimum four mobile homes, no matter which state you are located in (excluding Hawaii). However, after these first few properties, you may run out of capital to invest with unless you utilize some of the methods above.

Disclaimer: There are so many ways to screw up and make mistakes. Make sure to check out the rest of this website and forums to learn more about mobile home investing.

In conclusion, everyone’s financial situation and physical location is a bit different. Make sure you have a thorough understanding of your local market and personal financial health before moving forward seriously with any new business venture. Just because you have a limited amount of capital to get started does not mean you have to sit on the sidelines or delay growing your business. Have clarity in all you do and aim to help others daily.

Are you planning on investing in mobile homes? If so, which route would you take?

Let me know with a comment!

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.

7 Comments

    • John Fedro

      Thank you for commenting and for your kind words, Alphonso. I do hope this article has been helpful to you in some way thus far. As always, if you have any questions or concerns moving forward never hesitate to reach out any time.

      Talk soon,
      John Fedro

  1. Mike Olson

    Hi John –
    I’ve looked into mobile homes in the past but the monthly rental fee for the space seems to really eat into any big margins for rental income. Do you have criteria for what you are willing to look at in terms of monthly fee and have a cutoff point for it being too high?

    • John Fedro

      Thank you for commenting and reaching out, Mike. Every mobile home park is a bit different and every area is a bit different as well. I say this because mobile home parks can gouge their residence or be quite fair, or even very under market. With that said if a mobile home park is extremely high in their lot rents compared to nearby parks, you may only be able to sell a three bedroom monthly and make it cash flow over $300 per month. If you are trying to sell this home for all-cash the property may or may not be attractive due to the high lot rent in this particular park. For folks I work with we aim to stay in mobile home parks under $700 and lot rent. This is possible in every state we have found. With that said, is selling for monthly payments I encourage you to aim to make all your invested capital back within your first 12 months, net $300 cash flow per door, and sell for a minimum of five years worth of payments. Make sure you are doing this correctly and even utilizing the help of a mortgage loan originator when needed. I hope this helps and make sense. As always, if you have any follow-up questions or concerns never hesitate to reach out to me personally. All the best.

      Talk soon,
      John Fedro

    • John Fedro

      Thank you for commenting and reaching out, Kyle. Some mobile home communities will fix and resell mobile homes that they move into the park, get back through eviction, or get back through abandonment. In the same parks they may not sell you these mobile homes however they most likely will not have a problem with you purchasing mobile homes directly from buyers within the park. You must obviously convince the park you will keep the home there, pay lot rent on time, and also be approved. With that said it is only a small small minority of mobile home parks that will not want you in the community whatsoever because they fear US competition. I hope this helps and make sense. If you have any follow-up questions or concerns never hesitate to reach out any time. All the best.

      Talk soon,
      John Fedro

      • Kyle Dee

        Thanks John!

        Do you prefer to work with local or national companies to help prospects finance the purchase of a MH that you are flipping? Or have a company that you recommend? I know that it’s important to build a strong team when doing anything in Real estate.

        Also do you have any specific bullet points that you hit on when approaching a community manager about flipping in their community?

        Kyle D

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