How to Get Started in Mobile Home Investing

When it comes to real estate investing, most people only think about conventional properties like single-family homes, multi-family homes, condos, and apartments. A potentially lucrative niche that is often overlooked is mobile home investing.

According to a 2018 survey, 17.7 million people (or 5.6% of Americans) lived in mobile homes at the time. So, how do you make money investing in mobile homes? While many of these are owner-occupied, Fannie Mae reports that close to 2 million are occupied by renter households. As such, mobile homes can potentially be cash flow properties.

Such stats may have given you that final push you need to get started. But is buying a mobile home a good investment for 2021? And what are the steps you need to follow to start? We’ve outlined all of this in today’s guide.

So, What Exactly Is a Mobile Home?

Mobile homes are structures built in a factory on a steel chassis and then transported to a leased land or mobile park. Mobile homeowners can also place their structures on land they own or are purchasing under contract. As the name suggests, mobile homes can generally be moved from one place to another whenever the need arises.

Is Buying a Mobile Home a Good Investment?

Just like any other real estate investment, mobile home investing comes with several pros and cons.

The Benefits of Investing in Mobile Homes

Growing demand for affordable housing – Since millions of Americans earn minimal household incomes, there has always been a need for affordable housing options. With the recent job losses caused by the coronavirus pandemic, many people now cannot afford to pay rent in their single-family homes and multi-family homes. When the eviction moratorium expires at the end of January, there is likely to be a huge surge in demand for cheaper housing. 2021 is, therefore, a good time for investing in mobile home rentals.
Good value for money – In 1976, the US Department of Housing and Urban Development (HUD) laid out standards to ensure the quality of mobile homes. The federal standards regulated strength and durability, design and construction, fire resistance, transportability, energy efficiency, and overall quality. With these HUD codes, there are high chances that the mobile home you purchase will last a long time.
Lower prices – According to the United States Census Bureau, the average price of a mobile home is $81,700. This is much cheaper compared to buying a single-family home, apartment, or multi-family home. If you don’t have enough money to buy land for mobile home investing, you can simply place your mobile rental unit in an existing park.
Flexibility – Since mobile homes are portable, you don’t have to remain stuck in one location. If the current location is not viable for mobile home investing, you can simply move your structure to a different location.
Lower taxes – Mobile homes are usually classified as personal property. Therefore, the property taxes are not as high as those levied on site-built properties.

The Risks of Investing in Mobile Homes

Depreciates over time – Once a mobile home leaves the factory, it begins to depreciate in value. The main reason for this is the fact that mobile homes are classified as personal property, not real property. While personal property is moveable, ‘real property’ is attached permanently to a piece of land. Depreciation is especially disconcerting if you have to take a loan for mobile home investing.
Resale issues – Reselling the property is a challenge that many mobile homeowners deal with. Selling is especially difficult if the structure is located in a mobile home park. Since moving the building can be very costly, finding a buyer that wants to own the home in its current location can be difficult. In addition, many potential buyers are likely to keep away due to the stigma associated with owning mobile homes.
Risk of damage – Unlike site-built homes that have permanent foundations, mobile homes are often placed on temporary foundations. This makes mobile homes more prone to damage during natural disasters like severe storms or earthquakes.

How Can You Get Started with Mobile Home Investing?

Here are the 4 steps to start mobile home investing:

#1. Decide What Type of Mobile Home You Want

There are two main types of mobile homes; single-wide and double-wide. Singlewide mobile homes range in size from 52’ – 80’ long and 14’-18’ wide, while double-wide mobile homes are usually 52’ – 80’ long and 28’ – 36’ wide. A less common type is triple-wide mobile homes. The larger the house, the more it will cost you both for building and transportation to the site.

#2. Choose the Right Location

You want to choose a location where property is affordable and where you can earn a good rental income. To find the right location fast, use the Mashvisor real estate heatmap. With this tool, you can analyze different neighborhoods and identify the best locations for Airbnb and traditional rental properties. You can filter your search using metrics like listing price, rental income, cash on cash return, and Airbnb occupancy rate.

Don’t forget to consider regulations on where mobile homes can be placed before settling on a location.

#3. Find Properties That Will Make You Money

Once you’ve identified a great location for mobile home investing, look for potentially profitable mobile homes for sale in the area. Consider working with a local realtor who is familiar with this property type. You could also get in touch with owners of local mobile home parks to find out if they are looking to sell units.

When you come across mobile homes for sale, be sure to conduct an investment property analysis before buying. If the mobile home is currently located on a site somewhere, simply add the address to Mashvisor:

If you don’t find a mobile home of interest in Mashvisor’s database, you can add the address and get an analysis.

The calculator will compute numbers such as rental income, cash flow, cash on cash return, cap rate, and occupancy rate. The calculator will also show you the optimal rental strategy for mobile home investing. If you’re buying from a factory and the mobile home has no address as of yet, use Mashvisor to analyze comps to get an idea of the return on investment you can earn.

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#4. Get Financing

Since mobile homes are not considered ‘real property’, getting financing can be a challenge. Though most conventional lenders might not be willing to provide financing, there are other options you could explore. One source of financing worth considering is a chattel loan. This is a loan designed for people that want to buy things like boats, planes, or mobile homes. With chattel loans, the property itself is the guarantee for the loan. Even if you plan to place your structure in a park, you can still secure a chattel loan.

Other types of financing you might want to consider include Federal Housing Administration (FHA) loans, Fannie Mae, Freddie Mac, Veteran Affairs (VA) loans, and personal loans.

Conclusion

If you do your homework, mobile home investing can be one of the best decisions you ever make. It would be advisable to work with a real estate agent that has experience buying and selling mobile homes.

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