Good Idea:Starting out with Mobile Homes in Northern California?

[Ernest Tavares]

Hello, 

First time posting here, I am a recent college grad living in the Bay Area. I'm interested in using real estate investing as a means of income diversification. I don't have much capital around $30K and so I have been looking into potentially investing in a mobile home in the Santa Cruz or Sacramento area (bay area is simply not feasible). 

I am interested in understanding how to evaluate a mobile home compared to a more traditional home. For example do you immediately apply a discount factor when you see mobile homes, if so what would be a good number? I am looking at this as a means to get my feet wet in REI, would you suggest staying away from mobile homes as a first time buyer or encourage it due to their lower price (and therefore risk).   

Any insight is super helpful --- thanks!

[Jonathan Pflueger]

@Ernest Tavares

I like your way of thinking, especially right out of college. Mobile homes can be a tricky business, but they are also a great way to get your foot in the door. Mobile homes in the Santa Cruz area are not cheap and usually tend to sit around 300-500k depending on the park and condition. The "low" price also reflects the fact that the majority of parks will require lot rent which tends to be high (anywhere from 100-650). 

Lending on mobile homes are also a little more difficult than your normal SFH. For instance, if the home is on a foundation or not, whether you own or rent the land, or maybe the park land is communally owned and you are own just a percentage of it. The mobile homes date of manufacture will matter as well. All these factors have a big impact on whether you can get financing and the terms.

I have not heard of a "discount factor" when it comes to mobile homes. To be honest, the housing stock is so limited in the entire Bay Area, including Santa Cruz County, that any home is commanding a premium and mobile homes are not an exception. 

I would recommend attending a few Real Estate Meet-up in your area or the area you want to invest in. You will get a wealth of knowledge and may even meet someone who will want to partner with you.