Mobile Home Investing: 4 Things To Know Before Getting Started
Have you ever considered investing in mobile home parks?
If not, why?
Mobile home investing is largely overlooked by real estate investors. We tend to prefer single-family homes, multifamily units or other kinds of commercial real estate. But mobile home parks can be profitable assetsin part BECAUSE they are often overlooked by others.
In this article we will answer three common questions about mobile home investing:
- Is mobile home investing profitable?
- How do people become wealthy investing in mobile home parks?
- How does mobile home investing work?
Well also give you four key points you need to know before jumping into this exciting opportunity.
Soon, youll see how mobile homes can add value to your portfolioeven though they may not be the most glamorous asset class. And as always, take our quick investor quiz if you need more info, and well help you take that next step.
Building Relationships With Mobile Home Park Managers
As Rachel explained, all of her best deals have come from building relationships with park managers, networking within mobile home communities, and general word of mouth as a result.
If youre starting out today, she had offered some tips to help you start to ingratiate yourself into the mobile home community:
Singlewide Mobile Homes Vs Doublewide Mobile Homes
Manufactured homes and mobile homes are made in factories.
Mobile homes back in the 1950s-1960s were often times only 8-10 feet wide, compared to more modern day 14-16-foot-wide homes.
Manufactured homes are produced in sections. Each section will require its own serial number or vehicle identification number.
Each section will typically be moved down the highway as an individual unit. Once at the desired location, the section or sections will be secured and anchored safely to the earth. Many times a mobile home is placed on cinderblocks so as to be elevated safely off the ground.
- Singlewides : Singlewide mobile homes are built no bigger than 18 feet wide and 90 feet long, with many singlewides you see running an average of 14 x 60.
- Doublewides : Doublewide mobile homes on average are less than 40 feet wide and less than 90 feet long. Many doublewides you see will have an average dimension of 24 x 60.
- Triplewides: Triplewide mobile homes are three sections of mobile homes join together at the subject location. Triplewide manufactured homes are much less common than singlewides and doublewides.
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Five Reasons Why Mobile Home Park Investing Is Recession And Inflation Resistant
Chief Executive Officer at Keel Team Mobile Home Park Investments, overseeing the companys acquisitions and investor relations.
Concerns of an upcoming recession have sparked a renewed interest in commercial real estate investing as a viable alternative to the uncertainties of the stock market and other traditional investment vehicles. However, all real estate investments are not created equal. In fact, mobile home parks have historically delivered outsized returns, even in the worst of economic times. Here are five reasons why investing in mobile home parks is recession and inflation resistant.
1. Mobile home parks generally perform well in both strong and weak economic environments.
According to Green Street Advisors, a global real estate research firm, between 2004 and 2018, operating income from mobile home parks rose by 87%. This income never declined, even during the Great Recession of 2008.
According to Apartment Guides annual rent report, rent prices for a one-bedroom apartment now top $1,600 per month. Contrast that with mobile home park lot rents, that average near $300 per month, and mobile home living becomes a uniquely affordable housing option.
Cons Of A Manufactured Home
Manufactured homes also have some drawbacks, which include:
Land Availability/Suitability: It might be difficult to find a suitable or affordable piece of land to place a manufactured home in some places. Mobile homes or manufactured home communities are your best bet, but if youre looking to place your home outside one of those communities, youll probably have to buy a piece of raw landwhich can be more expensive than buying a site-built house.
Financing: Financing a manufactured home can be complicated. Sometimes, a lender wont recognize a manufactured home as real property. Theyll consider it personal property, and youll have to seek a personal property loanwhich may have very strict qualification requirements. Even manufactured homes with concrete foundations may not always be considered real property.
Low Appreciation: In many places, manufactured homes dontappreciate as much as site-built homes. However, thats starting to change as manufactured homes become more popular with homebuyers. Its possible that manufactured homes will appreciate on par with other types of housing in the future.
Stigma: Theres a negative stigma surrounding the mobile home or trailer park. As an investor, you shouldnt buy into that mode of thinkingits narrow-minded investing, at best, and poverty-shaming, at worst. The truth is, a manufactured home, regardless of the quality, can be a wise purchase for certain types of investors and homebuyers.
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Reasons To Invest In Mobile Homes
Now that we understand the terminology, letâs look at the reasons why people invest in real estate. This includes:
- Less competition
- Mobile homes are always in demand
- Investing in mobile homes can expedite your rental portfolio
Christy says that not everyone wants to live in an apartment â they may want a yard, but canât afford a house. Thatâs where mobile homes come into play. In the course, Christy notes that many Americans make less than $20,000 per year. People in low-income brackets deserve a nice place to live, and through mobile home investing, you can provide a nice and affordable mobile home.
So the real question is: with all these advantages, why isnât everyone investing in mobile homes?
Many investors simply arenât educated on how to invest in mobile homes and earn cashflow.
Next, weâll look at just that â ways to profit from a single mobile home unit.
The Process Of Buying A Mobile Home
If youve decided that mobile home investments are for you, follow this step-by-step guide for buying a mobile home:
1. Understand the different types of mobile homes
There are basically two types of manufactured homes double-wide units and single-wide units. The main difference is size, with double-wide homes being twice as large as single-wide homes. Rooms in a single-wide unit are connected back to back, while those in a double-wide unit are separated by a hallway. You could visit a mobile home park to get a good idea of both options.
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2. Choose between buying new or used
If you settle on buying a new mobile home rental, take the time to research different retailers. Compare at least three options before making a final decision. Before contacting the companies, conduct an online search and check their reviews. You could also ask friends and family to provide recommendations for mobile home retailers.
In case you think buying a used mobile home is a better option, you could work with a local real estate agent to identify mobile homes for sale in your neighborhood of choice.
3. Look at the features
Whether you are buying used or new, you need to look for features that could contribute to its overall resale value. Besides granite countertops and stainless steel fittings, consider other features such as:
- Built-in water cutoff valves
4. Analyze rental potential
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Never Been Much Of A Follower
Over a decade ago I moved to South Carolina. As I planted my real estate investing roots in new territory, I kept coming across more and more mobile home leads! It was time to take action! I heeded my mentors advice, but then went for it anyways. The value of having a real estate education had paid off, but now I needed a mobile home education.
Experience : Passively Investing
My firm, joined by a growing tribe of friends and investors, vets best-in-class operators in the mobile home space and invests heavily with them. And we couldnt be happier. We are enjoying the fruits of a wonderful asset class without the hassle and risk of operating the assets ourselves. This is my favorite investing strategy.
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Experience : Pure Ignorance
My mama always told me to stay away from trailer parks. Did yours?
She told me nothing good happens there. I think I even heard her use the word trailer trash.
My dear mother and father passed away several years ago. And after a lifetime of working hard at a well-paying job, Dad left us about enough money to cover their funeralsalong with some hefty credit card bills.
Im grateful for the life they gave me. But my parents werent great investors. In fact, they knew nothing about investing. And this was a handicap to meespecially when I made my first few million dollars at age 33.
I knew nothing about investing. And as a result, I confused investing with speculating. I launched into several years of binge-speculating . And it cost me dearly.
I actually had a chance to invest in a mobile home park back in those days. I swiftly turned my nose up at that opportunity. And I can imagine that you might have the same reaction.
Though I dont know if I would have had the humility to listen in my mid-thirties, I wish I would have had access to the wisdom of Robert Helms from The Real Estate Guys. Robert said, Live where you want and invest where it makes sense.
Please dont ignore this powerful asset class. Warren Buffett and Sam Zell, two of the top investors of all time, cant be wrong.
Buying A Mobile Home Park Takes Time
If you want to find the right deal, its going to take time for you to find just the right mobile home park to buy. Its not going to happen overnight.
Im not talking months either. It could be years until you find your first one.
Personally, I know an investor who took 3 years to find and negotiate a mobile home park to buy. And this was not a new investor. This was an experienced real estate investor with many years of experience under his belt.
Believe me, youll probably find a mobile home to buy before you find a mobile home park. If youre planning to invest in mobile home parks, just know it may take time to find and negotiate your first one to buy.
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Less Competition With Mobile Homes
Most real estate investors look down on mobile homes as an asset class. Unfortunately, theres always been a negative stigma attached to a manufactured home park, or any affordable housing.
But mobile homes are no different. Just like single-family homes, there are different types of neighborhoods when it comes to mobile homes. There are low-end, middle-of-the-road, and high-end mobile home parks. Each community attracts a certain type of clientele.
I tend to focus more on the high-end mobile home communities. I learned early on the importance of working in areas that fit better with my personality and attract the types of people who I feel comfortable with after a previous $2,000 nightmare.
Though I bought the home cheap, it cost me a lot of time and money. It was an expensive lesson, but one I took to heart and follow to this day with all my investing activities.
Due to the negative stigma of mobile homes, however, there is much less competition. In fact, I honestly dont know many other investors who buy mobile homes. They are pretty few and far between, which means even more opportunity for those of us who are interested in it.
Mobile Home Investing: $10k A Month In Positive Cash Flow
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Rachel cash-flows $10k a month from her portfolio of mobile homes.
When most people think of real estate investing, mobile homes probably dont come to mind. In fact, technically speaking, mobile homes are personal propertynot real estate.
Still, this is a sub-niche in real estate that comes with the familiar cash-flowing opportunity of buying a building and renting it out for a profit.
Rachel Hernandez has been investing in mobile homes for over 10 years. She made her first mobile home purchase for $3,600, re-sold it for $10,000 on a lease-to-own contract, and hasnt looked back since.
Tune in to hear:
- why mobile homes make an attractive investment
- how to find potential deals near you
- how Rachel markets for tenants
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Investing In Mobile Homes
When most folks hear the word mobile home, images from the film 8 Mile and negative stereotypes of mobile home dwellers enter their minds. These images can be misleading its not always the case.
Just like there are different types of neighborhoods in real estate, there are different types of neighborhoods in the mobile home world. Even with the title of this article, youre probably wondering how the word mobile home can even be in the same sentence as the word enjoy?
Hi, Im Rachel . I specialize in mobile home investing. Im here to tell you about how I came across this small little niche of investing and why I enjoy it so much.
When I first started my real estate investing career, I thought my path to financial freedom would be by building wealth through single family homes and apartment buildings. As a landlord, I found out the hard way that I was going down a path that led me further and further away from my dream of achieving total financial freedom. How could this be?
As a property owner, I felt that I had a job. Every month, there would always be issues with tenants. And, every year it seemed like my expenses would go up . Even worse, every time I added a new property to my portfolio it seemed like it would make things worse by causing more work. To me, it was just a new property to manage.
Now, most people would be ecstatic to add new properties to their portfolios. Though, I did not see it that way.
Mobile Home Investing Vs Investing In Single Family Homes
I will tell you, theres not much competition, Rachel began.
But not just anyone can walk in and buy a mobile home in a mobile home park or community though. You need to get approval from the park manager to do business in their park.
This is the part that can take time as networking and getting to know the park owners is how you find the best deals.
Another reason why Rachel likes investing in mobile homes over other forms of real estate is that mobile homes are, well, mobile.
You have a lot more flexibility over where youre investing, and you can even move the home if you really wanted to.
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I Was Told To Stay Away From Mobile Homes
Early on in my real estate career, I only invested in “regular” houses. “Stay Away”! That’s what people told me. Yet, something in my gut told me that there was an opportunity there. Their intentions were good – I just didn’t think they knew much about them. Somebody was making money with them, why not me?
Manufactured Homes Vs Mobile Homes
There are some clear and distinct differences between manufactured homes and mobile homes, but the two terms often get used interchangeably.
Society, in general, may even use the word trailer to describe these properties but no matter what name is used to describe this type of housing, it is always built in a factory and transported down the highway on wheels to its current destination.
Factory homes built after June 1976 that adhere to post HUD building codes are considered manufactured homes. Factory homes built before June 1976 are considered mobile homes.
Before June 1976, the Department of Housing and Urban Development had little rules or oversight when it came to factory-built housing.
Once HUD stepped in, many builders went out of business because it was no longer a profitable venture with the increased building and safety standards. The proactive name-change to manufactured homes was an effort to distance the industry from its current mobile reputation. However many people, including this article, still use the term manufactured home and mobile home interchangeably.
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An Answer To The Affordability Crisis
Mortgage applications are plummeting as rising interest rates deter an increasing number of would-be homebuyers, many of whom have been priced out of the game for some time anyway. And even if home prices begin to soften now in response, they will have a long way to go to impact those who were just about to afford a home before prices took off.
Mobile home parks offer a way for those priced out of buying site-built homes to still own their own home and be responsible for their own space. They can be free to paint and decorate however they choose, don’t have to let anyone else have a key to their property, and don’t have to hear anyone stomping around above them, blaring music below, or yelling through the walls. They’ll also likely have a small yard where they can cook out and kids and pets can play.
The White House is even acknowledging the potential mobile homes have to aid in the housing crisis. Part of the Biden administration’s housing plan includes making mobile homes more attainable with expanded financing options.