A mobile home is otherwise referred to as a trailer home, residential caravan, mobile home park, house trailer, static caravan or motorhome. It’s a prefabricated physical structure developed in a factory or industry on a chassis attached permanently and then transported to the site. It forms a part of real estate investments for most real estate investors in the United States. You can use it permanently as a residence or temporarily for holiday or accommodation purposes. It can be left semi-permanently or permanently at a certain location. However, for certain legal reasons, it might be moved from time to time and site to site.
They have a similar historic origin to traveller trailers. However, the two have now acquired different furnishings and sizes. Travel trailers are mainly used for vacation or as temporary residences. In this article, we will explore what makes mobile the best investment and some of its relevant information.
Is A Mobile Home A Good Investment?
You might be asking yourself, is a mobile home a good investment? Well, there is no denying that it’s a unique investment. However, whether it’s the best investment will depend on several factors, including but not limited to:
- The amount that you pay for your current rent
- Whether you are seeking to purchase used or new homes
- Whether you are planning to borrow money to buy the mobile house, and if that’s the case, what financial options are available for you
- The long-term financial objectives and goals that you’re
- The cost of space in your area
Let’s look at the sizes of mobile homes and why it’s worth investing in.
Construction and Sizes of Mobile Homes
First, it’s important to clarify that a mobile home is very different from a manufactured home and a stick built home. However, they come in different sizes and constructions. Let’s explore these sizes:
Singlewides (the 1980s and Newer)
Single Wides are developed with less than 18 feet in width and 90 feet in length. With a single wide, we’re talking about an average of 14′ x 60′.
Doublewides (the 1980s and Newer)
The doublewides are designed with an average of 40 feet in width and 90 feet in length. Most of these double wides have an average of 24′ x 60′.
Triplewides are made up of three different sections of homes put together at the subject location. They are, however, less common compared to doublewides and singlewides.
Benefits of Investing in a Mobile Home
There are several reasons why real estate investors should shift to mobile homes:
One benefit of buying a mobile home is that they are very affordable. Even if you were to buy them or rent them, they’d cost less. This can be attributed to the fact that they are mass-produced in industries and factories.
More Luxurious Options
You can access luxury items such as hardwood flooring, upgraded fixtures, and granite countertops with a mobile home. If you’re buying this option so that you rent to other people, you might be able to charge more for it thanks to the luxury options.
Lower Repair and Maintenance Costs
Nothing makes a buyer happy than knowing that their product will have a lower repair and maintenance cost. This is exactly what mobile homes offer. With these homes, the tenants will be responsible for any repair or maintenance issues. This will save you the time and resources of dealing with contractors.
Mobile homes are very safe and secure to live in. This is because it’s built under the ‘United States Department of Housing and Urban Development HUD code standards’. If you buy one of these houses, you won’t have to worry whether your property is situated in high-risk areas for storms, hurricanes and natural disasters.
There is a rise in population not only in the United States but also in the whole world. This means that there is an increased demand for housing and affordable accommodation. If you invest in mobile homes, there will be high demand for them. They can therefore be instant cash flow properties if they are fully rented out.
Lower Tenant Turnover
Mobile homes have a lower turnover rate than other types of homes, including but not limited to stick built homes, manufactured homes, apartments, modular homes, multi-family homes and single-family homes.
Few people have invested in mobile homes. This limited competition would mean less competition for you if you decide to invest in a manufactured home.
Downsides of Investing in Mobile Homes
As much as these homes come with, which are clearly several benefits, there are also some downsides of investing in them that we should look at. It is upon you to interpret these downsides and devise ways that you can use to mitigate them. Let’s go through some of the downsides:
Many people have reported discrimination when they live in mobile homes. The majority of the middle-class population see them as options for the poor in society. Others think that these housing units are dangerous. Such discouragements could make it difficult for you to find tenants if you decide on investing in mobile houses.
It’s common knowledge that mobile homes depreciate quickly compared to traditional homes. While this is advantageous for paying taxes, it becomes disadvantageous as far as the resale value is concerned.
Need for Land
Mobile homes aren’t built in the air. You’ll have to acquire land where you need to set up your structure. A good alternative is to find space or land in mobile home parks which proves to be very difficult. However, with a mobile home park, you’ll set up such homes without pressure.
Limited Financial Options
As a potential real estate investor, there is a high chance that you want to develop mobile homes from homes. However, the sad news is that most traditional lenders won’t offer you loans for traditional homes. The situation is tough when you don’t buy a mobile home together with land. You’ll remain with chattel loans as your only option. However, these loans charge a very high-interest rate.
Mobile Homes vs. Modular Homes vs. Manufactured Homes
Now that we have looked at the benefits and downsides of mobile homes, you must understand how they differ from modular homes and manufactured homes. Some people use mobile homes interchangeably with manufactured homes and modular homes. However, they are very different. Manufactured homes and mobile homes were distinguished in 1974.
Modern manufactured housing differs from mobile homes both in design and construction. A manufactured home is developed with very quality materials in a climate-controlled building facility. Manufactured homes also come in three sizes: triple, double and single sections.
Manufactured housing differs from modular homes and mobile homes regarding the type of foundation used in each case. A manufactured home has a beam and pier foundation with skirting. A contractor who understands how to develop a manufactured home can relocate it easily.
Modular homes are also constructed in a building facility and transported to their location. The major difference between modular homes and manufactured homes is that manufactured homes are built according to HUD codes, while modular homes are developed according to state and local codes. The codes of a modular home can vary with the state and locality involved.
The Process of Buying a Mobile Home
Follow through the guide below to achieve a successful investment:
Understand the Types of Mobile Homes
As we have seen above, there are two types of a manufactured home or mobile home; single-wide units and doublewide units. They differ mainly in size, with the single-wide homes being half the size of double wide units. There is also a difference in how rooms are arranged, with rooms in doublewide units being separated by a hallway while those in single-wide units having a back to back connection. Visiting mobile home parks will give you a good idea of these ideas. An ideal mobile home park has all types of homes.
Choose between a Used or New One
Which between a used and new home would work best for you? Depending on your needs, you should be able to answer this question with ease. Here, it would help if you understood both two options have their cons and pros. If you settle on a new one, ensure that you carry out enough research on different retailers.
Take time to compare a minimum of three options before making a decision. Before you even reach out to a company, carry out an online search to check out their reviews. Please ask for recommendations from family members and friends on the best retailers.
If you decide to go for a used mobile home, then consider working with a local agent to identify the best option available for sale.
Look at Features
It’s important to check out the features on a mobile home that would contribute to its resale value whether you’re buying a new or used house. Apart from stainless steel fittings and granite countertops, there are other factors to consider include:
- Built-in water cutoff valves
- Siding (preferably vinyl)
- Singled and/or pitched roofing
- Wood Flooring
Analyze Rental Potential
After you’ve settled on certain rental properties to purchase, you can proceed to add their addresses on Mashvisor, which is a real estate rental investment property analysis software. The tool lets you input basic information for off or on market properties. After you’re done, the tool employs rental comps based on the location of that property to ascertain its performance once rented out. From it, you can acquire key numbers such as cash-on-cash return, cash flow and rental income.
Explore the Financing Options Available for Your Home
You still have a chance of getting a traditional mortgage, only if you look for mobile homes that are considered ‘real properties’ by lenders. This includes properties that:
- Exist on a permanent foundation
- They are sold with the land on which they are established
- Were developed after the current HUD standards came into existence
If your mobile home of choice doesn’t achieve these requirements, there is still a possibility of getting financing through chattel loans.
Have the Mobile Home Delivered and Set-Up
Before you close on the income property, some retailers will offer you an option of including taxes, insurance, and warranties in the home’s final price. Though this offer looks good on the surface, it would be unwise to take it. It would be best if you instead secured extras from a local broker.
After closing on a mobile home, contact a transporter to deliver the home to the site you wish it to be installed. It would be best if you shop around for different quotes. A complete installation would take you about 21 days.
There is no argument that mobile homes can be a good investment if you’re looking for an alternative real estate investment. The only thing you should prepare for is how to handle the downsides. For instance, it would be wise if you paid for your mobile home fully and in cash. When advertising the home for rent, look for the best outlets since traditional tenants would ignore your listings on any popular site. To ensure that you’re getting into a good investment, do the math and ensure that the property is a cash flow rental. If it doesn’t make economic sense, you either move to the next mobile home on sale or head back to the traditional apartment market. We hope that you succeed in your investment.