Investing in mobile homes has become a highly lucrative practice in the housing industry and with good reason. There are millions of people living in mobile homes in the country, and the numbers are growing daily as people look for the most affordable housing. In addition to that, the tiny house movement is contributing to more and more people looking to live smaller. With this trend, investors are jumping in to make a big cut. So, why are mobile homes good investments?
As an investor, you have the option of buying mobile homes in a park and leasing out the homes or buying mobile homes to re-sell. This article looks at both scenarios.
Are mobile homes good investments? – The good
First, you need to understand that there is a low turnover in the mobile home market. Most mobile homes are in the same location they were first delivered to, which means mobile homes are not as mobile as you might think. Transportation is possible, but usually too expensive and too much of a chore for anybody to consider it. Meaning, they are almost as stationary as stick-built homes.
Mobile homes are pretty cheap to buy. If you decide to buy used, you get even more potential savings by purchasing a fixer-upper. You’ll have a better chance of making a profit off of the sale of a refurbished model home. Compared to duplexes and other investment properties, mobile homes have much lower maintenance costs. With mobile homes, the residents are responsible for their own homes, and as the owner, your responsibility is to maintain the land, and that’s it.
One of the best things about investing in mobile homes is the fact that the residents don’t leave. Mobile homes are not “mobile” per se, so moving a home isn’t standard practice. Meaning, most residents will be living there permanently or until they decide to sell. If a home does become vacant, your neighborhood will gain a new resident rather than an empty shell.
Are mobile homes good investments? – The bad
The biggest disadvantage of mobile homes is the fact that they depreciate, and at a rapid rate too. When investing in mobile homes, factor in that mobile homes will decline in value. Be prepared to lower your profit expectations.
Obtaining financing for mobile homes is also another problem. Finding loans to finance your investment will be a real challenge. When you do find it, the interest rates may be through the roof with large down payments. Older mobile homes will be hard to sell, and as an investor, you need to study the market wisely before you make any plans. With such little financing options, it will be hard for you to get a lot of money together.
Are mobile homes good investments? – The ugly
As a mobile home investor, you will probably make money, but until you do, you need to think about the social taboo. A lot of people consider mobile home living to be a low-level housing option. Although mobile homes are an affordable option for low-income housing, that doesn’t directly reflect the character of the residents.
At the worst, investment returns are not immediate. If you are looking to cash in big and have massive paydays then this is not the investment for you, especially if you are looking to profit off of “flipping” mobile homes. It will be hard for you to find mobile home buyers who pay in full. They’ll also find it difficult to get financing for a mobile home purchase.
Is it worth it?
Some states might require that you have a mobile home dealer investing license before purchasing a specific number of houses. In addition to that, if you are the kind of person who prefers to deal with realtors, then this will be hard for you because you will be dealing directly with occupants when it comes to mobile homes. There are those of us that are born with a natural entrepreneurial gift for turning a dime into a dollar. If that’s not your strength, then you may want to consider other investments.
So, are mobile homes good investments? While these are not to deter you from embarking on your investment, it is always good to know what you’re is getting yourself into. Of course, for some of you, the pros may outweigh the cons. If you have a knack for getting good deals and you’re a hard worker, then mobile homes could be the right investment for you.