how to invest in mobile homes

How to Invest in Mobile Homes: Complete Guide for Beginners

A mobile home is a pre-fabricated structure fitted on a chassis with wheels transported to a relatively permanent site and used as a residence. Mobile homes are also known as residential caravan, manufactured home, trailer home, or park home.

Mobile homes are movable and are customarily fitted with connection parts for utilities. They generally come in three sizes; single-wide’s, double-wides, and multiple/triple wide’s, and are used for permanent or temporary accommodation.

Investing in mobile homes is a worthwhile investment. Planning for this investment produces results. This article provides a complete guide on how to go about investing in mobile homes.

Take a Course On Real Estate Investing:

Step #1: Financing a Mobile Home Purchase

It is good to put your finances in order as you get started investing in mobile homes. Track your expenses and save up.

Banks regard mobile homes as personal property rather than real estate and might only give you a personal loan instead of a mortgage. The lender may require that your home meets the housing and urban development requirements.

In addition to the amount you have saved up, you may need to borrow funds. You can get funds from:

A) Chattel Loans

Chattel loans are one of the most available financing options for mobile homes. This financing method is most suitable if you intend to rent the land under the mobile home.

The downside of chattel loans is that they usually have high-interest rates.

B) USDA Loans

United States Department of Agriculture, responsible for rural development, offers loans for mobile homes to those who qualify. This loan has an eligibility criterion and vet applicants to determine who is eligible for assistance.

This loan is most suitable for investors who intend to have a permanent foundation and need to finance both the home and the land it will sit on.

C) FHA Loans

You may also get financing for your mobile home through Federal Housing Administration. This financing method still requires you to get another loan, but you are considered less risky since the government guarantees to cover your debt if you can’t.

To get financing, prepare documentation for your assets, income, and debts. Your financing grant will depend on the kind of mobile home you intend to invest in and the amount you give as a down payment.

Step #2: Learn your Market

Knowledge in the mobile homes market will give you the power to invest. It is good to read extensively on mobile homes and to visit parks in your area. Collect information that will facilitate informed decision-making when opportunities arise.

Pay a visit to your local investment clubs. Doing so enables you to meet other successful mobile home investors in your area. Mobile home dealerships are also a good source of information concerning the market.

Gathering information ensures you do proper due diligence. It is also advisable to build a good relationship with mobile home park managers.

Talk to the managers to get information concerning their communities. Another source of information is mobile home dealers.

Take note of good parks, middle off the road parks, and bad parks.

Step #3: Types of Mobile Homes to Invest in

It is good to determine the kind of mobile home you intend to get. There are two types of mobile homes to invest in;

A) Mobile Homes in Parks

This is where you own the mobile home as personal property.  You only buy the pre-existing home and not the land it sits on.  The mobile home park owner owns the land. The parks usually have stipulated rules and regulations to be followed.

You will be required to pay a monthly lot/rent fee that may include sewer, water, and trash charges. You get money from the mobile home by renting or selling it.

B) Mobile Homes on Land

This is whereas an investor you buy both the mobile home and the land it sits on. You own the mobile home as real property. You can either rent or sell the home. You can either sell for collect payment or cash.

This type of mobile home has its serial number written on the property’s legal description. You can also buy a parcel of land and put up a mobile home on it.

Step #4: Learn the Sizes of Mobile Homes

There are three sizes of mobile homes.

A) Single Wide Mobile Homes

This size of a mobile home is about 600 to 1400 square feet. It includes one to two bedrooms and fitted with one to two bathrooms. This size measures 90 feet or less in length and 19 feet or less in width.

This type of mobile home has a trailer-like appearance.

B) Double Wide Mobile Homes

Double wide mobile homes average about 2100 to 2500 square feet. It has a width of about 20 feet and a length of at least 90 feet. This size is fitted with two to three bedrooms and two to three bathrooms.

It also has added layout features not included in the single wide home.

C) Multi/Triple Wide Mobile Homes

The size of this mobile home can range up to 50 feet in length and 4500 square feet. In this type of mobile home, you’ll find at least three bedrooms and two bathrooms.

Its appearance is like that of standard site-built property and has more customizations than the other sizes.

Step #5: Know Your Cash Flow Strategy

One of the drivers of investing in mobile homes is getting returns and operating on a positive cash flow.  As a beginner, you will need to know;

How much do mobile homes cost?

Mobile home prices differ by location, size, structure, and other factors. Some of the things to note are; price of mobile homes varies a lot in different states. A network of contacts will inform you about lucrative deals on mobile homes.

The average price of a mobile home, according to Cost Helper, ranges from $51,400 for a single wide mobile home to $250,000 for a triple wide mobile home.

The average cost for renting a lot that a mobile home sits on range anywhere from $100 to $850 per month. Buying land costs more from an average of about %1,500 to $196,000 per acre based on the State that you are located.

How much do mobile homes rent?

Rent charges for mobile homes depend on the location, size and material used, and the house design.

The average mobile home lot rent costs anywhere from $200-$300. Renting the home plus other expenses costs an average of $700 to $800.

Step #6: Make the Purchase

Having obtained the necessary information concerning mobile homes, you will need to pursue leads. Getting your first deal might take time. Be patient, and wait for an excellent opportunity to arise.

It is advisable to connect with other people who do what you do. A mentor who has done previously done mobile home investing will guide you on how to invest.

Once you get your ideal mobile home, negotiate the best deal. You can now purchase the mobile home upon agreement with the seller. You will then need to decide on how to manage the home.

You may decide to manage it by yourself or allow mobile home park managers to manage it for you.

Step #7: Market Your Mobile Home for Rent

Once you have purchased a mobile home and it is in the condition you want, start looking for motivated tenants or buyers.

You can advertise your unit for rent with park managers and park owners or advertise the home online. Market in places where people shop and where they live. A local community bulletin board could also be a suitable avenue for marketing.

Zillow is a great option to place the home for rent on the internet to reach thousands of people every week.

It is also good to constantly be in touch with mobile home contractors and dealerships.

When you get a prospective rental client, get them to fill out an application form. Do a proper background check, and have an agreement contract.

You will also need to determine the kind of leases to use. For example, you may decide to do a 20-year lease with the choice to purchase. Doing this implies tenants can pay off the home and purchase it whenever they decide to.

Step #8: Selling Your Mobile Home Investment

When you decide it is time to cash out and sell your mobile home investment after years of cash flowing it as a rental unit, here’s some tips and steps to take to get it sold.

A) Check with a Realtor About Selling the Mobile Home on the MLS

In some cases, a realtor can list the mobile home for sale on the Multiple Listing Service but in other realtor districts this is not allowed. Instead the realtor has to rely on non-traditional marketing methods to get the mobile home sold since it can’t be placed on the MLS system.

B) Put Up a For Sale Sign in the Window

Pick up a For Sale sign from your local Wal-Mart or Home Depot and write your phone number on the For Sale sign to be contacted by people driving by who see this sign.

This strategy also can work when renting your mobile home, in fact, my last tenant found my house driving by and saw the sign in the window, leading to him calling me and becoming my tenant. Signage works!

C) Place A Sign Out Front of the Mobile Home Park Community

Place a few different for sale signs in front of the entrances to the mobile home park so that people driving past the community can see there is a mobile home unit available for sale in that park. It also stands out for current residents who are renting in the park that may want to switch to owning a mobile home.

D) Pass out Fliers

Talk to the park managers and hand them a flier to put on the bulletin board if there’s one in the community center or front office.

Final Thoughts

Overall, the steps above are a detailed guide for beginners who intend to invest in mobile homes. Mobile home investing is an excellent opportunity to earn cash flow.

It is a viable investment even for beginners. It is excellent to understand what you are making an offer on, the people you are working with, and the steps required to seal a win-win deal.

Take a Course On Real Estate Investing

Or sign up for my weekly email newsletter to get tips and lessons sent to your inbox.

Leave a Comment

Your email address will not be published. Required fields are marked *