Mobile Home as a Vacation Rental

[Sam G.]

Sorry if this is something that has been asked a million times before. I did a forum search and couldn't find a good answer. Full disclosure, I know nothing about mobile homes and just wanted to get a quick "yes" or "no" before I went digging further into this.

Is anyone using a mobile home as a vacation rental for cash flow? I was looking at mobile homes in the Rehoboth beach area (this property, just as an example) and it seems like the possibility for cash flow could be significant. After $300 a month for your mortgage payment and $600 a month lot rent, you have a property that could likely rent for ~$200 a night during peak season (based on a quick glance at similar properties on Airbnb). Even accounting for some vacancy, repairs, and upkeep, it seems like the cash flow should be pretty reasonable. 

I figure there must be a reason why everyone isn't doing this, and I just wanted to find out what it is.

Thanks!

[Miriam Seidel]

Hi Sam,

I do vacation rentals with mobile homes in communities.

Make sure first - call the sales office at Silver View Farm and ask if they allow short term vacation rentals - "weekly"

I saw on the ad, they require a background check for purchase - most do; as well as income verification to make sure you can afford the monthly lot rent to the community. MOST mobile home communities do not allow short term rentals, if they allow rentals at all. MOST have a rule of no felons allowed. If by some miracle, they do allow short term rentals, they will probably want a background check done on each and every renter you have. This could be a turn-off for some vacationers.

Some communities that allow short-term rentals have a minimum of 3 or 6 months; where again the guest must go thru the background application check with the community - usually $50-$100 fee.

Also note, that mobile home communities that do not do a background check, will have felons & drama/crime in the community. 

Being that said, mobile homes in communities, that cannot be but on a block foundation, cannot be funded by the normal mortgage companies/private lenders. Mobile homes use different loan companies than regular real estate, because you do not own the land, and because it is "mobile", there is no collateral for the lender to foreclose on if needed.

Some reasons why you do not see many mobile home vacation rentals in communities in Rehoboth are:

- Community does not allow it - period

- More Difficult to get a lender (not considered real estate)

- Expect Community Lot Rent to go up every year 5-10%

- Add your electric/gas, lawn maintenance (which is mandatory in a community), pool fee, insurance, etc.

- If you cannot walk to the beach, must have much much lower rates to compete with others / renter pool reduced considerably

- High Vacation Season is now only about 6 weeks, where you can get top dollar rent / then another 7 weeks for shoulder season rent / and the rest of the year is lucky to get enough to break even - or get a long term renter for the off-season, where now you become a landlord vs. a vacation rental owner at a low rate, where hard to find a good renter that won't trash the place - & then landlord/tenant laws apply - may not be able to evict if needed in time for high-season guests (now what)

- More upkeep and maintenance needed on a mobile home - they are not built as well/sturdy etc. as a stick built home on a foundation

- There is a stigma attached to "mobile homes"

- The numbers just do not make it as good an investment, when you add devaluation into the calculations

- Resale is like a car, devalues over time

HOWEVER- If you find a community that will allow short term vacation renters, and you have all cash, you can probably find a good deal on an older used home where they numbers make more sense. Spend the money on the decor - make it "beachy", and then you might have a winner vacation rental for budget-minded families and retired couples that do not mind the short drive to the beach, as long as they can find parking. If the community allows dogs, this is a way to increase the rental pool -being Dog friendly. I do not allow cats-period. The sub-floors in a mobile home are very expensive to replace if a cat pees and seeps into the sub-floor. Adding $100 fee for the family pet is added revenue, and is less expensive than boarding their dog while gone. Also look at www.bringfido.com. You can post your listing there for free, and many dog owners use this website. Just make sure they have their updated rabies shots and on flea/tick meds. (I have the guest email their vet records prior to arrival). Also, find out if there is a weight limit for dogs in the community. If they allow large dogs - winner! Very hard for large dog-owners to find decent accommodations. I have also found that a couple with a dog and no kids are wonderful guests. Usually no damage, and they are very concerned about keeping place neat & tidy. I prefer dogs over kids any day!

I know this is a very long response, but thought the more info -the better.

Feel free to contact me if you have more questions.