Any mobile home investors out there?

Question

I met with a seasoned investor today for some advice. They have not done mobile home investing (they know people who have), but suggested it as a way for new investors to break into investing at lower cost per entry.

I am not seeing a ton of information on here for mobile home investing (unless you want to buy an entire park). So below are some of the questions Im thinking about:

Mobile Home Investing Questions

• Any general advantages for new investors?
• I only see the homes for sale (like on zillow or a park's website), not the lots or entire parks. How are people investing in entire parks? Is simply investing in the home less favorable?
• I don’t see anything about possible financing… are there any options?
• I know they only depreciate (or at least I think I know), whats a typical schedule/yearly %
• Do you evaluate the investment of a mobile home the same way you’d evaluate a SFR investment property? In regards to Cap Rate In regards to CoC-ROI
• In regards to Cap Rate
• In regards to CoC-ROI

• In regards to Cap Rate
• In regards to CoC-ROI

Thank you! Any feedback is greatly appreciated!

Kirk Bausch · Answer

@JOHN DALEY - Jon F has a great website with information to suit your needs.

https://www.mobilehomeinvesting.net/

if you decide to jump in to parks, i'd be happy to help.  I'm a student of Kevin and Charles and i'm in contract on 1 property now. And, should have another 2 properties locked up short order.

happy investing.

Miriam Seidel · Answer

The biggest obstacle is the staff and/or owners of the community that you are looking to buy in. All they care about is the lot rent. You'd think they would care about upgrading a property to make the park look nicer, but it's an afterthought for them. I suggest finding a community that doesn't already rehab their own park-owned properties for sale, and creating a good relationship with them. So, when they take back a property, you are the first they will call to purchase it from them. MHCs are very political, and have grudges with other MHCs. If an owner knows you are working a community that they have a beef with, you are now on their no-list.

On the average, adult only/retirement communities, have more great buys, due to people passing away or going into assisted living. However, most park's rules state that you must be 55 to buy. And, on that note, all-age family communities have fewer available, but can usually sell for more once re-habbed.

Lastly, Very Important, whoever is going to do the rehab work MUST be expert in mobile home work and mobile home roof, carport, and floors. If your handyman has never done mobile homes before...run away immediately and find someone who knows mobile homes. They are more difficult to rehab. For example, not a good idea to use regular tile on floors (mobile homes "breathe" with temperature and humidity changes), best to use vinyl tiles that have beveled edge and grout with special pre-mixed grout especially made for these tiles or vinyl wood planks that "float" and leave half inch gap at the walls....same with carpet, need to leave half inch gap at walls, otherwise carpet will buckle and need re-stretching. Also, need someone that doesn't mind getting underneath the home to work on plumbing, a/c, leveling, etc. Very tight spaces - need someone that can fit underneath and be able to do the work (otherwise, have to open floors to do plumbing repairs). The first two things to check when looking to buy a rehab mobile home is the roof and the sub-floors. If there are "soft spots" in the floors, this means there was water damage, and the particle-board sub-floor is toast. So, this means adding these high costs for replacing into your budget. If you buy a place for $1K, and roof and floor cost $10K, plus a couple of months lot rent, taxes, closing, utilities, you are at $14K in so far, before even updating anything else. Can you sell for a profit, if the surrounding homes sell at $15K or less?

There are also insurance issues to consider. Many insurance companies that do mobile homes, will not insure if it was built earlier than 1977 (40 years old), hence why they don't re-sell at very high prices, no matter how beautiful you make it. The new buyer has to be ok with not being able to insure.

Lesley Resnick · Answer

I have looked at mobile homes as an asset class several times and decided not to jump in.  There are a some low dollar deals. However, they do not include the land.  In those cases you are buying personal property and rent the dirt below it.

Buying an entire park, is a better play. However, the costs are more in line with other asset classes. I have know a number of people who buy parks as a land banking play and eventually redevelop it.

Matt Souza · Answer

Hi @Kathryn Mills,

The main advantage for investing in mobile homes (not parks) is the low upfront cost. You can often find deals for $3-5k that need some work or need to be moved to a different park. If you want to learn the ins and outs of mobile home buying/selling, I highly recommend reading Lonnie Scruggs. He provides a lot of great information and is hilarious.

It is extremely difficult to get bank financing on mobile home parks as an investor. Your best bet is private money or a line of credit.

Cap rate is irrelevant when discussing mobile homes themselves, but very important when researching parks. CoC ROI can be very high with both (20%+) if done correctly. Best of luck!

Kathryn Mills · Answer

Thank y'all all so much! This is great information!

Rachel H. · Answer

@Kathryn Mills Mobile home investing is a niche. Usually, you'll find many active investors just by visiting the types of businesses in the industry (i.e. mobile home parks, mobile home dealerships, local manufactured housing association, etc). Since it's a niche, there's not as much information. Most investors shy away from it due to the negative stigma. Though, if you can get into it and make some good contacts it can be quite profitable. Good luck!

Any mobile home investors out there?

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