Quote from @Casey Jones:
I'm still in my first year as a Realtor here in Arkansas and I've been listening to BP and Real Estate Rookie podcasts every day trying to get the most information I can possibly take in! Looking to get my first flip property after the first of next year and hopefully be able to turn one BRRRR into a portfolio of rentals. I've also been lookin into mobile home park investments. Seems the way to go with a housing shortage in our local market and a lower initial investment cost than an apartment complex. Our local rental market is less than 2% vacant. If you need an agent in the Arkansas River Valley or North West Arkansas area please feel free to reach out. I would love to help you purchase your next investment!
Mobile/Manufactured Homes – good investments?
You’ll find many opposing opinions of course. Mine comes from actual experience.
Here’s what I’ve documented from more than two decades in the business:
MOBILE HOME FLIPS
Mobile homes in parks are most often occupied by the owner. The homeowner rents the lot from the park. Most parks do not allow the homes to be occupied by renters.
Mobile homes in parks are considered personal property, not real estate. They are bought and sold like cars or boats, etc.. The paperwork needs to be no more than a title and a bill of sale.
Mobile homes are depreciating assets. Hang on! This is one of the main reasons they are so profitable for those that understand how to benefit from this housing type.
Many mobile home loans go into default when the homeowner stops paying. The homeowner is the registered owner on the title, the bank is the legal owner on the title.
Upon default by the homeowner, the bank repossesses the home and becomes the sole owner. The bank then becomes responsible for the park rent, the utilities, the maintenance, the insurance, etc.
With no money coming in from the loan and being responsible for hundreds of dollars in expenses every month the bank is in a real bind. The home has depreciated and is most often in need of TLC, repairs, or rehab to bring it back to saleable condition.
The bank may have hundreds or thousands of loans on mobile homes spread over a huge geographical area. There is no way they can reasonably afford to keep enough crews or hire unknown entities in all the areas to try and fix up the homes to sell and try to make any profit on homes that are worth less than when the loan was initiated. The banks are in the lending business, not the rehab business. Besides, the actuaries have figured in these defaults as part of their normal business process.
The banks are highly motivated to remove these negative cash flow homes from their inventory. Most of the time the homes are sold to investors for quick cash. The banks know they must leave a lot of room for the investor to make a decent profit. Ater all, the investor puts out the cash and time to buy, fix, and resell the home. Buying the homes at steep discounts and adding a little TLC accounts for very healthy profit margins for flippers. The homes are rarely sold to people that will occupy them. They normally don’t have the cash, time, or expertise to buy and fix up the mobile.
Besides banks I've purchased many homes from FSBOs, some I even found on the MLS. There's a lot of reasons people will sell mobile homes for a lot less than they could have. Once again, they're not real estate. A whole different, rarely understood mentality.
I always flip mobile homes in parks for cash; I don’t carry contracts. I can make a lot more money quickly reinvesting cash than trying to make interest over an extended period. And, I don’t have to worry about getting payments, dealing with defaults or evictions, or having to repossess and rehab trashed units. Profit margins on mobile home flips have consistently ranged from 40% to 200% over the last two decades.
Mobile homes require a lot less cash than real estate to buy and fix.
Mobile homes are bought and sold easier and quicker than real estate.
Mobile homes offer higher profit margins than real estate.
Mobile homes have far less competition than real estate.
MOBILE HOME RENTALS – and , YES! I also own real estate!
Most of my rentals are SFR mobile homes on private property. These can be considered real estate (just eliminate the title). I purchase them for around half of what a similar size stick-built house would cost but can rent them for practically the same amount of money. Many renters don't care, they're only interested in the number of bedrooms or the square footage. I rent them for 10 or 15 years then sell them on a 20 year contract and let someone else take care of the maintenance and upkeep. I don't have to be concerned about either appreciation or depreciation. Flipping units allowed me to make enough cash to buy the rentals outright. I don't have to worry about banks or other lenders.
I’ve moved many mobile homes, developed property with mobile homes, done just about everything possible with mobile homes :)
BOTTOM LINE
Sure, there’s a fair amount to know about this unique housing niche. It’s not complicated or difficult to learn. Worthwhile? I’m not the best person to ask – too darned prejudiced.
