Buying a Mobile home instead of paying rent.

[Spencer Keables]

Alright so this is my first time posting anything, normally I just read other posts. I will be graduating with my bachelors degree in the next month, which means we will be moving to whoever I can land my first job, most likely Utah or Idaho. My goal is to work for a about two years before applying to grad school. My question is whether I should rent a place for those few years or should I look into buying a mobile home. Me and my wife are in the position where we could probably pay off the mobile home pretty quickly as long as we get a good deal. I like the idea of basically owning it and only having to worry about the HOA fees, which would allow me to start saving for grad school. If I were to pay rent, I would probably be paying around 700 a month and after two years I will have payed around 17,000 just for rent. Its hard for me to be wiling to put out that much money just for rent. Instead of just paying rent I wondering if it would be a better idea to buy a mobile home that I could either rent out once I go to grad school or just sell it. I just wanted to see what advice I could get from those who know how mobile home investing works.

[Skyler Smith]

Welcome, Spencer!

Just by the way you've worded your post I can already tell that you're going to do just fine over the years. The most important thing I see there is that you're thinking outside the box and planning ahead. As you go throughout your career I'd suggest that you always try to own rather than rent. I think that the next step above the mobile home would be buying a small duplex or 3-4 unit building that you can live in and rent out. There are a few important reasons that investing in actual real estate is better than renting an apt, or owning a mobile home.

Rent - if you're planning on paying $700/mo then I'm guessing you'd be moving here to Logan or staying somewhere in SE Idaho? 700 is hard to get in Salt Lake, so if you're going there I'd plan for more. Mobile park pad fees here in Logan are ~$260, so you're saving on rent alright. If you're living in a small multifamily home and you buy right, your portion of the rent would likely be that or even less. The key with a small multi is the multiple streams of income. You'd be paying part of the payment, but you'd have other streams of tenant income that you'd use to build up your equity and make payments.

Appreciation - the mobile home will almost certainly go down in value. That's fine as long as you understand that and are ready for it. You'd still be keeping some of your principle and saving it as equity, because the mobile home will still sell for SOMETHING after you're done, it just won't sell for as much as you bought it for. Let's be sure you are thinking of buying a used mobile home in the 15-17k range and not a new one in the 50k range. $15k is your sweet spot.

Leverage - sounds like you're planning on financing the mobile home, which is using leverage, but your terms are not likely going to be too great on a mobile home. Mobile loans look and operate more like car loans, and as far as I know there's no beautiful "FHA" style government loan that will help you buy a mobile in a park. A small multifamily property can have an FHA loan that requires sometimes just 3.5% down, with crazy low interest payments as well.

Well I'm all fired up now, I could talk about this sort of thing for hours! I think you'll make a good decision either way, and it sounds like you and your wife are willing to make small sacrifices now to be able to enjoy life better down the road - which is the true definition of investing!

Good luck!