Manufacuted Home Rehab

[Gregory Schwartz]

I am looking at applying BRRR strategy to a manufactured home. Based on comps the ARV supports a $15-20k rehab. The biggest concern is that the house is a manufactured home and was built in 1985. Do these types of homes last as long as a standard SFH? Similarly, will it appreciate at a similar rate when compared to SFH of equivalent size (3/2 1500sqft)?

Thanks.

[Chris C.]

I deal almost exclusively with Manufactured homes.  I do not believe you can beat the price to rent ratio.

Couple of my experiences: (I only buy on land and not in parks.)

1. Only rent double wides.  To much turn over in single wides.
   1. I have had great success owner financing single wides and renting the lots though.
2. Generally most of my homes are mid 90's or newer.
3. I have found nothing that cost any more to repair than a conventional home save a few receptacles and light switches.
   1. I convert this to standard types if they need replacing.
4. I generally have about 40k all in for a unit that rents for about $800.  These homes are generally worth between 60-80k retail so I do have instant equity just like a stick built home.

My opinion on appreciation is that modern manufactured homes that are 5-15 years old appreciate close to the same rate as stick built homes.  The entire concept is that they are a cheaper alternative per sf to stick built homes.  In my experience there value trails behind stick built homes as a cheaper option for those that can't afford stick built.  

Why 5-15 years old?  Brand new homes do lose a decent amount of value in the first 5 years.  Only about 15 maybe 20 years ago did the homes consistently get vinyl siding and shingle roofs with a look that does not look dated.  They are like a conventional ranch home that consistently attracts buyers due to there affordability and not terribly dated look.  Going forward model year 2000 double wides and newer, that are well maintained, will increase in value.  Worse case at the rate of inflation and best case at the rate of overall housing values.

The biggest challenge with manufactured homes is financing.  I have a bank that will finance up to 2 for an investor but for the most part financing for an investor is non existent.  I use either private funds are mostly just all cash for my rental units.

As noted all these observations are for homes with land.  Completely different animal on rented lots.