Is buying a mobile home to rent a good investment?

Question

Hello Everyone,

I am a California, Bay Area (BA) native that is trying to get into real estate investing as soon as possible. I dont have much cash for a single home down payment in BA so I am considering purchasing a mobile home 2hrs away from me  to rent out as my first investment. Do you guys thing this is a good move considering this will be my first investment or should I be patient and take advantage of the FHA loan and look for a duplex to get started?

Thanks in advance, I really appreciate your advice.

Jesus

Stephen J Davis · Answer

Mobile homes can cash flow but they don't make as much money as a house. They depreciate in value over time just like a car and the clientele can be a little rough. I grew up in a mobile home. I would focus on single-family houses as a rule.

Briannan Burns · Answer

This is such a great question! As a new investor, I have the same question. Mobile homes are typically cheaper to purchase, so it seems like they would be a good investment; however, as @Rachel H. stated, it probably totally depends on the neighborhood, condition of the home, and the surrounding area.

For instance, I found a decently priced mobile home in Florida, but I feel like because of the weather temperaments there, one would need to keep possible home repairs in mind. It's close to a few beaches, so rent could probably be a little more, which would help to make the price of the home back quicker, thus allowing pure cashflow quicker.. but I'm not sure if, overall, this would be a good investment.

Maybe try to make a pros/cons list with everything you can think of, just starting out, then if you're able to view the property, make a more detailed observation.

Good luck!

Jesus Magana · Answer

@Rachel H. Thanks for sharing your experience. This was helpful.

Marelyn Valdes · Answer

I prefer CB or frame homes, but found a MH on 1/4 acre of land that just needs cosmetic work.  It's a huge 3/2 and needs flooring, kitchen cabinets, some holes in the walls patched and replace glass in about 6 windows, paint, and appliances.  Paying $34,000 and it will take me about 3 weeks to get it ready to rent.  Rent will be $900 - 950 a month and estimated repairs are $10,000 max.  If I want to flip it rehab would be closer to $20,000 and it would easily sell for $75,000 - 80,000.   The Ocala, FL rental market is very hot with few units available.  I recently sold another MH I had paid $28,000 for 4 years ago, which I rehabbed and rented for 3 years and sold for $70,000 cash "as is" - it would have needed a new roof due to age (no leaks) to finance.  I am closing on it Friday and have already had a possible tenant check it out and is waiting to see if after rehab.

Michael Ablan · Answer

@Jesus Magana -  Make sure you find out the rules in the park.  Some parks only allow owner occupied occupants, so you definitely need to find out if it's allowed

Paul Sofia · Answer

Mobile homes (manufactured homes) depreciate when they are not converted to real property(affixed to land and recorded at the Register of Deeds  and title being surrendered) besides normal depreciation of wear and tear.  If it is real property, it will adjust as the market adjusts.  Mobile homes in parks depreciate because they are personal property (titled).  Regardless, it's still a  mobile home is still a SFR.

You can get shady shady clientele no matter what you are renting.  It's all about how you screen your prospective tenants.

Rachel H. · Answer

@Jesus Magana Before you make a decision, you may want to check out other areas where mobile homes are to get a better idea of the types of neighborhoods in the area. Early on in my mobile home investing career I made the mistake of buying a mobile home just because it was cheap. Though, I failed to realize the type of neighborhood that it was in. It did not attract the type of clientele that worked with my personality. You can always change the home, just not the neighborhood. So I ended up selling the home to another investor. Lesson learned. Good luck with your real estate investing journey!

Jesus Magana · Answer

@Stephen J Davis

Appreciate your response! Thank you @step

Is buying a mobile home to rent a good investment?

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