People interested in real estate investment often focus on conventional properties such as condominiums, apartments, and single-family houses. Investing in mobile homes may be lucrative but must be addressed more frequently. The 2018 survey revealed that 17.7 million Americans, or 5.6% of the population, lived in mobile homes.
Find out how to profit from purchasing and selling mobile homes. Fannie Mae reports that about 2 million properties are leased, and individuals own many. This suggests that mobile houses may be profitable investments. These stats may be the last push you need to start. Is buying a mobile home in 2021 a wise idea? This is all explained in today’s tutorial.
What Is A Mobile Home?
Mobile houses are manufactured on steel frames and transported to mobile parks or leased land. Mobile homeowners may install their houses on their own or contracted property. Since they are dubbed “mobile homes,” they may be relocated as required.
Is Mobile Home Purchase A Good Idea?
Mobile home investments have pros and cons like any other real estate investment.
The Pros Of Mobile Home Investment
- More people want cheap housing: The US has always needed inexpensive housing because many families don’t make much money. Due to employment loss due to the COVID-19 epidemic, many individuals cannot pay rent for their single-family or multi-family residences. After the eviction moratorium breaks in January, there will be a surge in demand for affordable homes. Therefore, 2021 is a favourable year to invest in mobile home rentals.
- Good value for money: The US Department of HUD established quality criteria for mobile homes. Federal standards regulate quality, fire resistance, portability, strength, durability, design, construction, and overall performance. A mobile house with HUD codes is likely to live longer.
- Lower prices: The US Census Bureau reports an average mobile home price of $81,700. A single-family, apartment, or multi-family home would be more expensive. Consider placing your mobile rental unit in an existing park if you need help to afford land for mobile homes.
- Flexibility: Because mobile homes are mobile, you don’t have to stay in one place. Consider moving your mobile home if the current location is unsuitable for investment.
- Lower taxes: mobile homes are often considered personal property. This results in cheaper property taxes compared to on-site houses.
The Cons Of Mobile Home Investment
- Depreciates over time: A mobile home’s value decreases after leaving the manufacturer. The fundamental reason is that mobile homes are considered personal property, not real estate. ‘Real property’ is fixed to land, whereas ‘personal property’ is transferable. Taking out a loan for a mobile home investment might be challenging due to depreciation.
- Resale issues: A common issue for mobile homeowners is selling their houses. Selling a building in a mobile home park is challenging. Moving the structure might be costly, making finding a buyer for the current residence difficult. People interested in purchasing may not do so since having a mobile home is seen negatively.
- Damage risk: Permanent foundations are used for site-built houses, whereas mobile homes often require temporary foundations. Mobile houses are more susceptible to damage during major storms or earthquakes.
How To Start Mobile Home Investments?
Mobile houses have two primary styles: single-wide and double-wide. Single-wide mobile homes are 52-80 feet long and 14-18 feet wide. Double-wide mobile homes are 52-80 feet long and 28-36 feet wide. The triple-wide type surprises. A larger house will cost more to construct and relocate to.
Select Location
Choose a location with affordable real estate and the potential for high rental revenue. Utilize Mashvisor’s real estate heatmap for easy location selection. Use this tool to identify ideal communities for both Airbnb and regular rentals. You may filter your search by listing price, rental revenue, cash-on-cash return, and Airbnb occupancy rate. Check the guidelines for where your mobile home may be placed before deciding.
Buy Profitable Homes
After finding a good investment opportunity, search for profitable mobile home listings in the region. Examine working with a local real estate agent who knows this property. You might also inquire with local mobile home park owners about selling units. When considering buying mobile homes, do an investment property study first.
This tool calculates rental revenue, cash on cash return, cash flow, cap rate, and occupancy rate. The calculator reveals the optimal mobile home rental strategy for investment. If the mobile home you intend to purchase is still in production and lacks a location, utilize Mashvisor to compare comparable houses to estimate profits.
Get Loan
Financing mobile homes may be challenging since they are not considered “real property.” There are alternatives to conventional lenders who may offer you something other than money. Consider a chattel loan for a potential source of funding. This loan is available for purchasing boats, aircraft, or mobile homes. People who get chattel loans pledge their property as security. You may get a chattel loan for a building in a park.
Conclusion
Investing in mobile homes may be beneficial if done with diligence. Examine working with a real estate agent with experience in mobile home sales.
