5 New Reasons Not to Invest in Mobile Homes
So many articles focus on the positives and beautiful side of real estate investing. As almost every active investor knows, real estate investing and mobile home investing requires hard work and daily effort to succeed. The work and effort is not always glamorous. In fact, sometimes you will question if what you are doing is all worth your limited time and effort.
This article will talk about 5 reasons not to invest in mobile homes.
1. Mobile Homes Depreciate.
Mobile homes inside pre-existing communities do typically depreciate in price. Unlike traditional site-built properties mobile homes inside pre-existing parks do not typically come with land and therefore the value typically lowers over time. If a mobile home is attached/legally-joined to private land also included in the sale than the value of this land may certainly increase over time. Additionally, if a mobile home is located in a high demand area than the high demand and low supply may cause an artificial increase in price temporarily while this housing shortage exists locally.
Pro Tip: Making repairs to the property, adding an additional bedroom, relocating the mobile home to a more desirable park, and selling the mobile home for monthly payments are additional ways to potentially increase the resale value of a mobile home property.
2. Mobile Homes are Gross.
Don’t be a bully! Single-family homes and even mansions can be gross as well. A property’s condition is typically due to the owner’s pride of ownership and ability to make repairs when needed. In reality there are many manufactured homes and mobile homes that are beautifully taken care of and provide a safe shelter for their owners. Mobile homes and manufactured homes can last for 60+ years when well taken care of.
3. Mobile Homes are too management intensive.
This 100% comes down to the occupants within the property. It also comes down to whom you, as the investor, allow to reside in your properties. A low-risk resident will cause little to no problems moving forward. While a high-risk resident may cause immediate problems and ignore working with you amicably moving forward.
Who will be inside of your investment mobile home?
- Payment-buyers: When you are dealing with a properly vetted low-risk payment-buyer, you are dealing with a person that makes a sizable down payment, wants to make their own repairs, has a pride of ownership, decent income, is credit conscious, and wants to pay you off in order to own this property free and clear. There is minimal effort involved in managing these folks. If a situation arises the local mobile home park manager may be able to help if the property is located within a pre-existing community.
- Long-term Renters: When dealing with long-term renters you are dealing with residents that do not want to make major repairs. With that said some residents will plant gardens and make minor improvements to the home once moved in. If a situation arises the local mobile home park manager may be able to help if the property is located within a pre-existing community.
- AirBNB renters: Many parks will not allow long-term or short-term renters within their community walls. However a mobile home located on private land (that you also own) may likely be rented out short-term following all local rules and regulations. Keep in mind that depending on the local area some people may or may not be interested in staying overnight in a mobile home. With that said some mobile homes are beautiful and in amazing areas that absolutely could be filled up by renters on a regular basis.
Pro Tip: Go overboard when it comes to prescreening and thoroughly vetting any and all applicants looking to move into your mobile home property. Remember that your property is valuable and you have what the resident wants. You deserve to find the right person to fill your property. It is better to have an empty property than a risky or flaky resident inside.
4. Mobile Homes are difficult to sell for cash or get bank approved.
General statements like this that make such a blanket statement often times misleading and untrue. While it may be true that many mobile home buyers across the country do not have an extremely large amount of savings, there are absolutely many buyers that do have tens of thousands of dollars cash to eagerly put down on a used mobile home that suits their family’s needs. There are typically more cash buyers closer to large metro areas or coastal areas that are in high demand.
There are slowly more and more lending programs coming available into the marketplace for new and used mobile homes, both located inside pre-existing mobile home parks and attached to private land. Some nationwide lenders include 21st Century and Triad Financial. Buyers and sellers interested in mobile home financing should also contact local banks and credit unions in the area to discuss what financing/lending opportunities are available for their specific situation.
5. There are too few mobile homes in my area.
There are mobile homes and mobile home parks located in all 50 states, minus Hawaii. In a previous article on this website, found in the related article link below, we discuss how to find many of the mobile home parks located within a 50-mile radius around you right now. Click the link below and follow the instructions under the fourth bullet point.
Related article: 5 Benefits hile investing in manufactured homes
In conclusion every mobile home is a unique property. Every mobile home seller and buyer is typically in a unique situation. There are typically no cookie-cutter approaches or purchase offers to make with mobile home sellers. It is best to fully understand exactly what you are making an offer on, buying, who you are working with, and the steps needed to safely move forward in any win-win transaction.
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