Thinking about buying mobile home for rental
Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
I've run into a situation where I might be able to buy 1-3 mobile homes. 1 single wide for around $20K and doublewides for $24K. You have to leave them on space which is $320 month and single rent for $825 and double $925, that is lot included. I might be able to get them a little less if I buy 2 or 3. They are 1998 and newer. I don't know a lot about mobile homes. But $500 and $600 month after lot rental and before repairs seems pretty good. I will assume there will be no property taxes since on somebody else's lot. What does insurance typically cost on one of these? Can you depreciate these like you would a normal stick built rental home? I know these are different guidelines, more similiar to buying a car than a house. I think they even have a blue book for them.
Thanks.
Hi Brian and group,
The homes sound quite nice and newer at 1998 and later models. The concern in our opinion is the cost. Even purchasing at $20,000-$24,000 you will not make your money back for 2.5+ years. I always aim to make all my invested capital back in less than 12 months, if I'm paying with all cash versus seller carry back.
I know your area well and can tell you those are about retail prices. Additionally many parks will not allow renting in their parks, but you may already know this fact.
Are you considering renting these homes? Renting leads to filing your homes with renters, with renter's mentalities. Renters do not take care of a mobile home like an owner will. With that said mobile homes can be damaged quickly so it is important to stay on top of your homes and renters if you decide to rent.
To answer your other questions 1. they do depreciate tax-wise like SFRs. 2. There is a Blue Book value to these homes but unless you are getting in appraised or refinanced this value is unimportant as an investor. 3. Insurance runs approx $40-$70 per month.
Hope this helps and keep us posted on how you decide to move forward.
Best,
John Fedro
There is usually no property tax but a Mobile Home is usually Registered with the state and the owner must pay an annual registration fee.
Mobile homes are not built as well as stick built homes so do not stand up to tenant abuse as well as stick built.
I do not understand some of the monthly numbers you presented, can you calrify
Brian Mathews, I'm with Rod as I'm a bit confused by your numbers. The single wide rents for $825 and youre responsbile for lot rent at $320? The double wide rents for $925 and youre responsible for let rent at $320?
You mentioned have the expenses of lot rent and expenses. You'll also have vacany and several other expenses. And keep in mind, even though you have paid for the homes in cash, you still have significant, relative to the amount of rent, carrying costs each month when the home is empty.
You also have to pay annual property taxes for the home only even though it's on rented land. It would be categorized as personal property tax and taxed through TCAD or WCAD depending on which county the home is in. You can look up the assessed value on the county website and calculate the annual taxes from there.
The prices of the homes are decent but certainly not exceptional. You may want to keep idgging or negotiate to lower the prices.
I'm curious why the homes have to remain where they are. Is the park selling the homes and making the sale contingent on a lot lease or is there already a lease in place? I have some buyers who might be interested in homes in the GEorgetown area.
I'm not real familiar with trailers, so trying to get some info. Holding costs and maintenance aren't a big deal, I can account for that. It's the taxes and depreciation I'm unfamiliar with. Entire amount paid by tenant is $825 and $925 minus lot rental of $320. So before any expenses in a perfect world is $500 and $600 left over. Since there is no hope of appreciation, my only hope is depreciation. I did a little research today and looks as if not a good deal overall. I'm not going to pay cash and interest is friggin' too high with too much down. I'm looking at a note of $350 month with 25% down. So I'll either let it go or try to negotiate the price down. I might be better off buying a new trailer and putting on the lot, rather than buying a used one. Rates are better on those newer than 10 years, after 10 years, it makes no difference. You get a better rate on a doublewide vs a singlewide. Cashflowing $250 month on $320 lot rental and $350 month payment before maintenance and vacancies with no appreciation and not sure what depreciation just seems stupid. Especially if there are taxes on home itself.
I'm going to call my bank and see if any possibility of a signature loan or other options available. 12.99% just seems ridiculous. I know its a trailer, but those are credit card rates.
Not sure of why they have to stay other than too expensive to move. Just the deal they are offering.
All areas are different but with the mark up on new homes you could buy a used one and have it moved for less than what that mark up would cost...just like cars. It's similar to the value dropping the second it's pulled off the lot.
Personal property tax is inexpensive. It is like a car, and most of the used homes are taxed for less than a newer car.
Insurance is relatively inexpensive if you get a company that is versed in mobile homes. Some companies do not know a thing and will charge more based off that. If you buy multiple, inquire about a commercial policy covering the dwelling and recommend to tenant to carry a renters policy.
I'm with Bill W. regarding the price. Seems you can find better value or negotiate it down.
Best of luck!
Hi Brian and group,
The homes sound quite nice and newer at 1998 and later models. The concern in our opinion is the cost. Even purchasing at $20,000-$24,000 you will not make your money back for 2.5+ years. I always aim to make all my invested capital back in less than 12 months, if I'm paying with all cash versus seller carry back.
I know your area well and can tell you those are about retail prices. Additionally many parks will not allow renting in their parks, but you may already know this fact.
Are you considering renting these homes? Renting leads to filing your homes with renters, with renter's mentalities. Renters do not take care of a mobile home like an owner will. With that said mobile homes can be damaged quickly so it is important to stay on top of your homes and renters if you decide to rent.
To answer your other questions 1. they do depreciate tax-wise like SFRs. 2. There is a Blue Book value to these homes but unless you are getting in appraised or refinanced this value is unimportant as an investor. 3. Insurance runs approx $40-$70 per month.
Hope this helps and keep us posted on how you decide to move forward.
Best,
John Fedro