Buying mobile home parks

[Jen Stevane]

What are the pros/cons of buying mobile homes and the land under them? I understand that there's a stigma and the houses are not built well. So when do you consider it? Thanks.

[Ed Emmons]

In my opinion, which goes contrary to most here on BiggerPockets, is it is all about cash flow. Mobile homes do depreciate to a point but then they are cash cows. Some that are fully deprecated are still in excellent condition. If the homes are set up right they can last 50 yrs plus. I just bought one that is 44 yrs old in like new condition. I will install new windows, 1” of R 7.5 insulation to the outside and vinyl side it since I am in Maine. I will be all in for about $6000 including set up, moving and labor. I will rent it for $650 - $675 per month. Since I own the park where it sits, my return is over 100%. I typically will have to go through them every 10 yrs or so beyond minor maintenance and painting. I don’t use carpets and I do quarterly inspections and charge out any repairs needed to the tenants, that are above normal wear, at the time of inspection . 

The downside, if you want to call it that, is that it requires a full time person for every 25 - 30 homes you own. I pay him about $35,000 a year as an employee. On 25 homes I will net about $7000 to $7500 a month above lot rent and that includes paying him. If I am rehabbing complete units or bringing in new units like the one mentioned above, I will need a second person for that. 

I rarely would buy a home that old but it was truly like new and I got it for the cost of moving. Homes built after the late 80s may have 6” walls and good insulation in them from the factory so the overall quality is much better. Therefore, they make better units to keep. Obviously, the condition of them can vary greatly so inspect thoroughly.