This post is not about proper maintenance nor is this post about obtaining insurance if you are a private mobile home owner; this article is for mobile home investors investing in mobile homes located inside pre-existing mobile home communities.
When is hazard insurance inside a mobile home park necessary? Inside many mobile home parks obtaining insurance is optional in most areas. Higher end parks may require all owners have insurance on their properties whereas most average parks (based on pad-rent prices) will allow each owner to decide to insure his/her own home. When in doubt ask the park manager about requiring insurance. A reminder that if there is a bank loan on your mobile home, the bank will likely require insurance be kept on the home at all times.
Should I obtain hazard insurance for my empty mobile home inside a park? This depends on the safety/condition of the park and if you plan to keep the home insured after you find a long-term tenant-buyer. Some investors have a natural risk tolerance higher than others. If you worry about your investment home being broken into or destroyed before you get it sold/rented you should likely purchase a shell coverage or a vacant home policy to protect yourself while the home is being sold or rented. Once you sell or rent the property you will likely have to update the policy and those insured.
Should I obtain hazard insurance for my filled mobile home inside a park (when selling via payments)? If you are holding less than 10 mobile homes then my advice is yes! However this is very optional due to the fact you should have purchased this home for under $9,000. If you do carry insurance this yearly cost will be divided by 6 months and added to the tenant-buyer's monthly payment to you. If you decide to not carry hazard insurance then get in writing that the tenant-buyer will pay you an extra $25-$50 per month for you to self-insure the property. This means that if the home is damaged beyond repair the tenant-buyer will not owe you any more money even if they have not paid you in full yet. The benefit when self insuring is adding $25-$50 per month to your cash-flow. If you have 10 or more homes this cash-flow can really add up. Self insuring a property will not protect or insure the occupant's personal items.
Should I obtain hazard insurance for my rented mobile home inside a park (when renting the home out)? Yes, always. Renters rarely care for your investment more than you.
How much will this cost me and where should I go? $300-$1,000 per year in most areas. Try big-name nationwide companies and small local mom-and-pop insurance businesses.
What type of insurance should I carry? Vacant or a shell policy of the home is vacant. Landlord's policy if the home is rented. If the home is sold (even within Trust) obtain an Owner's policy with your Trust and Trustee as additionally insured. Confirm with you agent that you are covered correctly.
Who pays for the policy? Ideally your tenant-buyer will always pay for his/her insurance upfront. If your tenant-buyers cannot pay for this premium upfront then you may pay for this cost and instruct your tenant-buyers to pay you back over the next 6 months; keep collecting this added amount for the next 6 months as escrow for the next years insurance premium. If renting you will almost always pay for this yearly premium.
What if I choose not to carry insurance? You will not be protected from mayhem and you will likely increase your monthly cash-flow through self-insuring your mobile homes. Self insuring your homes is only advised if you hold more than 10 mobile home properties inside parks.
If I missed your mobile home insurance related question above please comment below or email me personally with your questions.