Personally speaking I believe that clarity is immensely underrated in today's world. Without clarity we find ourselves drifting through life, love, and business unclear about our next moves. Even worse we move forward with false ideas or misunderstood directions that may cause us to fall and stumble in confusion and costly errors. Clarity in any new business venture can likely be discussed for hours and hours concerning the ins-and-outs of every particular step of the business in which you begin.
This article comprises a quick list of 5 more reasons why some investors may wish to steer clear of investing in mobile homes for profit. As a mobile home investor for the past 11 years I have come to understand both the positives and negatives of the manufactured home investing business. Below are some negatives.
Your reputation will change: In my experience it is best to commit to one or a few niches and be very well known for these dealings. Becoming an expert in everything leads to a watered-down image people have in their minds of you. When you let investors, Realtors, bird-dogs, and others know you invest in mobile homes you will be labeled as a “mobile home investor”. If you do not feel comfortable having others knowing you are associated with mobile homes this business is likely not the best fit for you.
You will be spending time directly with people: Mobile homes require that you speak directly with sellers and buyers. More than a real estate business mobile home investing is a people business. If you would rather work deals with a Realtor and/or simply stay behinds the scenes this business is likely not the best fit for you. With this statement said this is only from the experience I have had. Perhaps you are able to generate significant profits not interacting with mobile home owners however in my deals the greatest profits are the ones made directly with mobile home sellers and buyers.
Your friends will laugh at you in the beginning: When the money starts coming in you will be the one laughing. Until then however many of your friends and even family members will question and even laugh at you for starting down this business path. Mobile homes obviously have a reputation of being less valuable than traditional site built homes, and in many respects they are. To many folks this translates as mobile homes being less profitable and therefore less worthy of respect. In reality however mobile homes, bird-dogs, and mobile home sellers are just a worthy of our time and respect as anyone else needing help.
Most deals do not result in big paydays: Due to many funding sources being difficult, but not impossible to obtain, your exit strategy is one that will more likely result in renting or selling your mobile home for monthly cash-flow. While the laws have changed in the recent years and selling a home with seller financing is strict, the ability is not dead. With this said your ability to create an exit strategy of selling a mobile home for a large cash-payday will have to be properly understood and due diligence preformed before any purchase is made.
John, but what about buyers with all cash? In short many end-user buyers interested in purchasing a mobile home, whether on private land or inside a park will not have $10,000 to $100,000 available to purchase a home outright. While it does happen, it is the exception. Be prepared to accept monthly passive income.
You may need a co-signer: While purchasing a mobile home attached to land in a non-bank-qualifying manner you will not likely require a credit/background check, however many mobile home parks will ask to verify your credit and background history prior to you investing and owning within their park. This makes common sense as you are renting land within their park and the park manager and par owner would like to know your past history.
If you have less than fair credit you may be asked to have a co-signer with you on the lease agreement until you quickly resell the home. Another common solution to your poor credit may be a few hundred dollars as a security deposit to the park. These requirements and criteria will vary from community to community. Over the years I have found that honesty speaks just as loudly as your history. Be honest and up front with park managers as to what they will find and why. Lying about your history will almost always make things much worse than the honest truth.
While I do not wish to deter anyone from their personal income goals and/or getting started with mobile home investing I would rather be frank and upfront with everyone rather than painting a rosy picture that mobile home investing is all smooth sailing. Over the past 11 years I have loved mobile home investing and it has been worth every moment of ups and downs.