TRAILER PARK HOMES- Yay or Nay?

Question

I am considering purchasing a home in a trailer park in Riverside, CA for my first rental property. The inside is remodeled and it looks very nice! Super livable. Now, this is something I can afford now. I would like to know if anyone here has purchased a trailer park home for their first property and if they recommend it or not. I'm not sure if I should just save up some more and wait or jump on this deal! I am feeling super excited to get my feet wet in real estate investing. Thank you ahead of time!

Aaron K. · Answer

@Navjot Dhaliwal as this is your first deal, triple check the space rent anything below $200k here is probably going to have space rent in the $600-$800+ per month range which really eats into your cash flow. Just because it is cheap does not mean it is a good deal.

Navjot Dhaliwal · Answer

@David Braut Wow thank you for your response! and I agree, now that I am doing more research, I am thinking out of state will be best!

David Braut · Answer

Trailers/manufactured homes have high cost of repair due to them being made with cheap materials in a factory. You will not own the land, only the "mobile home" which is considered personal property so while it may be an "investment" of sorts, it is not truly a "real estate" investment. Also consider that one of the major profit centers for mobile home parks is in raising rents regularly so you will have unpredictable expenses when it comes to projecting your lot rent moving forward. My advice is to put your money down on a cashflowing sfr out of state. Get a good property manager and enjoy your investment!

Daryl Luc · Answer

I know a guy who has five. No complaints different from the rest of us who have non-trailer property. He changes up the advertising tho: "Custom pre-fab in park like setting"........ ;)

Account Closed · Answer

I just turned down a deal in Rancho Mirage for $57000 ARV $100,000 ,needed about $20000 in work. The kicker is the lot rent at $680 @Navjot Dhaliwal, its a slow moving park the lot rent can really eat up your profits

Michael Santopadre · Answer

@Navjot Dhaliwal I recommend you look into John Fedro's pod cast/ You Tube channel. He advises on Mobile home investing. He is apparently very successful and has a one on one consulting / training arm too. LOTS of good information. He has been on BP podcasts as well. I'm interested in Mobile Home Parks but watch his channel to get the home knowledge, as I'll inevitably own a POH, Park Owned Home. Many MH flippers out there making a living or using it as a stepping stone to bigger deals and a business model. Here is one I just watched yesterday. https://www.youtube.com/watch?v=uZQR4vNSEyg If this gal can do it, you certainly can. @Paul Moore has VERY valid points, so be smart.

Paul Moore · Answer

Hi @Navjot Dhaliwal. I'm glad you are seeking counsel. I am a huge fan of mobile home park investing. My investors and I have invested millions in mobile home parks this year, and in fact, I just published a special report on this topic (reach out to me if you'd like a copy). I have owned 4 individual mobile homes, and 3 were among the biggest disasters of my two decades in real estate investing. I would recommend you not do this. It's not just me either. I work closely with quite a few mobile home park investors, and they all feel the same way. They don't want to own the trailers. And when they end up with one, they do whatever they can to get rid of it ASAP. Frank Rolfe was on the BiggerPockets podcast this summer and he was on my podcast as well. He is the 5th largest owner of mobile home parks in America. He feels very strongly about not owning individual mobile homes. I really hate to sound this strongly, but I wish someone would have told me this 19 years ago when I bought my first one. I hope this is helpful. If you can partner with someone to buy mobile home parks, that is an entirely different situation. Do it!

Alex G. · Answer

As do all dwelling types, from garden sheds to mansions. With few exceptions, land appreciates. dwellings depreciate. Buying an MH in a park is a bad idea because the buyer acquires a depreciating asset and the MHP owner keeps an appreciating one.

Charlotte Dunford · Answer

@Navjot Dhaliwal make sure you buy both the land and the home. I'm in the mobile home park business, not mobile homes. If you did not own the land the home is sitting on, it would be a losing game for you as the land owner has all power. In my case it's me.

Jerry Lucker · Answer

@Navjot DhaliwalIt may work. It works well for some. Due diligence will tell. Run the numbers. Be wary of advice from some who aren’t and haven’t been in the business.Just because mobiles aren’t real estate doesn’t mean they can’t be a good investment.Many mobile homes built in the last 25 years or so are made if the same basic material as stick built. With a little maintenance they will hold up well.As a note - I’ve worked with mobile homes for 20 years.