Mobile Homes Good Investment?

Question

I am considering branching out into purchasing mobile homes for a buy and hold strategy. It seems that you can buy these mobile homes much cheaper than regular SFR's and still generate a reasonable positive cash flow.

I would appreciate some feedback from experienced investors in mobile homes and/or mobile home parks to give me some key points in buying and holding this type of property.

Why can't you edit the title when you make a dumb spelling mistake like I did on this one for Investment instead of Investmest?

Thanks!

Bill Gulley · Answer

Robert, some people have made good money in the MH racket, some have conived thier way into taking alot of money (better describes making it). It can be an honorable investment strategy. You can find deals as Greg points out, but remember if you don't own than land or the park, they can become a liability real quick....depends on location and how nice they are, IMO. I have done deals on parks, only a couple of individual MHs keeping with my startegy that it is always better if someone else owns them and not me! Long term? You're looking at pure cash flow with no hope of appreciation on the MH, might as well rent cars, IMO. Actually, IMO, with the new rules we must live with, I don't see MHs being that great unless you are really busy, guess it depends on where you are, but in my area, not too much profit in them to justify the pain of compliance.

Terry Drake · Answer

Robert, I've found that no mobile home parks around here allow rentals. Perhaps you can set it up as a lease agreement and make it fly that way. The mobile homes that I'm dealing with in my park are all old homes. Most of them 30 - 40 yrs old. It works for me because I get them for almost nothing, put $1500 in 'em for some floor work, new carpet and vinyl then flip it for 4-5k. I do have a MH I rent out, but it's on real property. IMO if you are considering a buy and hold strategy this is the way to go. You have the monthly rent, but you also have the real estate underneath appreciating. If you have the land, you have a few exit strategies. You can rent out the MH for as long as you like or you can sell the mobile home and keep the land. You make money on selling the home, but then you also charge lot rent for the home to stay on your land. This way you are still getting $300-$350 / month in cash flow (plus the $250/month for the mobile home note) but you are not responsible for repairs or maintenance.

Greg B. · Answer

Phil, I drive through MHP's and look for underperforming assets. Usually these are vacant MH's or MH's that are for sale. They may need some work on them, maybe not. I find out who owns it and how to get it. If it's worth it to me I buy it and rent it out. If I can get a rental for $5000-$6000 total, rent it out and net $250- $300/ month it is worth it to me. I get all my money back in a year and still have the asset. I do manage them myself. All of my holdings are within 30 minute drive of my house. Most of the time I find these myself. Occasionally one deal will lead to another.

Account Closed · Answer

You may want to consider a Mobile home park in an area that has "Snow Birds". People from northern areas that move to the south for the winter months. There are several mobile home parks in my area that only operate seasonal and make a very good profit. I considered a purchase a year ago and they had GREAT financials. It was purchased before I could even make an offer!

Rachel H. · Answer

Hi Robert, I would really have to agree with Bill (Financexaminer). There have been some folks who have really had success with mobile homes, have liked the business and continued with it. And, on the other hand - there are those who have not and have found the mobile home business not to be their cup of tea. I would say, it's really one of those things (if you are interested in it) where you have to take the time to learn the business, try it out and see if you like it. And, like any business - it takes time and commitment to learn the ins and outs of the business as well as the market (i.e. supply and demand, market values, etc). One thing I've learned is that just like single family homes, there are different levels of clientele in the mobile home biz. For me personally, I prefer to work at the upper end of the spectrum (as opposed to the lower end). In my opinion, it's really all a matter of personality and seeing what works/what doesen't work. What works for one person, may not work for another. Hope that helps!

Mike Matthews · Answer

Terry, you are in the gold mine, Pure Gold my friend. Parks such as that in Houston are rare as they are bought out and made in condos. Is that park mostly Spanish. I know the older parks like that in the Pasadena TX area sure are.

Mike Matthews · Answer

Only sell Rent to Own, Average purchase all in for me is 8-15k for my homes. I sell Rent to Own, that way I am protected from the safe act. 2/1 400 a month $2,500 down 4 years 2/2 450 a month $3.000 down 5 years 3/2 500 a month 3000 plus down 5-6 years Odds are you will get most homes back every 2 years. Repeat the process and start again. Be sure to train your tenants. This is business not love, Leave the soft heart at home.

Phil Petite · Answer

Greg, do you have a particular process you go through to find these mobile homes? Also, do you manage the deals remotely or do you actually go see the homes and manage the deals yourself? I'd be more interested in learning about the process.

Greg B. · Answer

I rent out 3 of them in MHP's Robert. Some people lease option, I rent them. What ever works for you. Point is, it can be profitable.