Welcome back, Newer mobile home investors listen up, “If you are a newer manufactured home investor and have yet to purchase your first investment mobile home. The this post is for you.” This tutorial article and videos are centered around making your first few deals:
- The easiest fix as possible
- The fastest resale as possible
- Targeting the most potential buyers as possible
- The most profit per effort as possible
The content below comes from a combination of my own investing and helping investors nationwide build a profitable business investing in individual mobile homes inside parks and attached to private land. This article concerns investing in mobile homes inside preexisting parks. Mobile homes on private land are another completely different and fun animal.
First: Which mobile home parks to look for to invest within
Mobile home communities can be owned by a large corporation or just a single person. Parks will have a variety of rules and restrictions that all residents must follow.
With a quick phone call and proper script the information below is easy to obtain and analyze by calling each park. During this call do not mention your intentions of buying and reselling mobile homes within their park. This is reserved for a later discussion with the park management. This call is simply a “fact finding mission”.
Park Lot Rents: Mobile home communities are typically realistic when it comes to the amount they charge for monthly pad-rent or monthly lot-rent. With that said there are greedy parks that over charge their residents for the land.
While starting to invest in individual mobile homes inside parks aim to be inside parks that charge an average price in the same zip code. If you call around to 10 parks in one zip code and every park charges $400-$500 per month, do not go through the park that charges $600+ per month.
Investor's rule: A rule of thumb is that you cannot charge more per month for a park with a gate and pool, but you can charge more for a mobile home with more bedrooms compared to a smaller mobile home. In short a higher lot rent will typically reduce your cash flow monthly compared to a park with a lower lot rent.
Additionally if you are in a hot-spot area where the lot rents are all over $650 per month then aim to travel inland or to a different area to find zip codes with lot rents below $650 per month to start. Here you will find more affordable mobile homes and less of a cash buyer demand, both of these are good for investors.
Age Restrictions: Some parks in certain areas around the country only rent land to “senior citizen” buyers. Whether you are the required age to live in these parks or not you could likely purchase a mobile home inside these parks, however I will advise against this on your first few deals. When selling a mobile home inside a senior park you are eliminating a large demographic of your buyers (I.e. everyone under 55).
Some parks have other unique age restrictions, such as no minors staying in the park over night, no one under the age of 40 may live in the park, or only persons older than 65 may own in the park. Either way stay away from these parks until you understand this business and have a few deals under your belt.
Owner Occupied: If you are looking to purchase a mobile home inside a park that only rents mobile homes to tenants versus allowing the tenants to own their own homes you will not have much luck. In short make sure that every mobile home park allows owner occupants to buy/own homes within the park and not just rent the homes.
Pet Friendly: This is not a deal-breaker piece of criteria in my book but many of your future buyers will have or want pets. Some parks completely forbid any pets and other parks will only allow certain pet weight limits. For your first few homes inside parks aim for the path of least resistance and only invest in parks that do allow most pets.
Second: Now let's turn our focus to the actual mobile homes in these ideal parks described above
Your first few investment mobile homes should have:
Size of bedrooms: Make sure that your first investment mobile home does not have one of these small bedrooms. These small bedrooms are a real problem when it comes to reselling the mobile home to a buyer expecting to be able to use every bedroom.
Number of bedrooms:
In almost every market it is important to remember that:
- 4 bedrooms sell faster than 3 bedrooms
- 3 bedrooms sell faster than 2 bedrooms
- 2 bedrooms sell faster than 1 bedrooms
For this reason aim to make your first mobile home investment a 3 bedroom. 4 bedrooms are rare however every lucrative if you are able to purchase one at the price and terms you need to make the deal Win-Win.
Age of the property: Every mobile home has a buyer for it. With that said let us focus this article on the idea of being able to resell to the most amount of buyers that would be interested in this specific mobile home. Today’s floor plans are more open and spacious than the floor plans of past decades.
- Mobile homes from the 2000′s you should consider new and easiest to sell assuming in good shape and with attractive terms.
- Mobile homes from the 1990′s you should consider almost new and easy to sell assuming in good shape and with attractive terms.
- Mobile homes from the 1980′s you should consider borderline average/old and are still relatively easy to sell assuming in good shape and with attractive terms.
- Mobile homes from the 1970′s you should consider old and small, and are more difficult to sell assuming in good shape and with attractive terms.
- Mobile homes from the 1960′s you should consider functionally-obsolescent and are the most difficult to sell assuming in good shape and with attractive terms.
Condition: As stated in the bullets above the condition of your first few mobile homes at the time of resale should be in nice and very livable condition to target the majority of buyers. This is because most buyers with money, stable jobs, and good income will want to purchase a mobile home that is ready to be moved into versus a mobile home that is a handyman special.
In addition to reselling your first few investment properties in nice and clean condition to your end buyers, try to aim for your first few properties to be clean and presentable when you find the home as well. Less repairs mean a faster sale time, less holding time, and less rehab costs for you.
Appliances: For a full priced offer it can be wise to include appliances. Buyers may or may not want to have appliances included however it can be good to offer these with the sale of the home. Try to negotiate that these appliances convey with the sale when you originally purchase the investment mobile home from your seller.
Size of home: Single-wides or double-wides does not matter as much as an investor would think when it comes to reselling a mobile home quickly. If the rooms are a good size and there is ample space in the living room and kitchen then both single-wides and double-wides are comparable.
Some investors claim that double-wides are actually a riskier investment because there is more square feet of living area and roof space to be damaged and therefore may require repair in the future. In this author’s option the size makes no difference as long as the criteria above are met.
In conclusion make sure you have a realistic plan to safely and profitably invest in your next mobile home. When you become more seasoned and have a few deals under your belt then you may wish to experiment with mobile homes outside your comfort zone. Ask for help if you are nervous or apprehensive about any particular mobile home investment deal. Remember that every deal has to leave the seller winning too = Win, Win, Win deal only.
The bullets above follow the mindset of investing with the path of least resistance. If you do not mind making repairs yourself or selling a mobile home with small bedrooms then please pick and choose from the criteria above as you see fit. The above advice is aimed to make the newbie mobile home investor’s life easy while getting started and learning this business safely.
If I am missing anything please comment your questions and thoughts below.