For the past 60 years mobile homes have received an unfitting bad-rap. In the same way the latest Hollywood tabloid headlines often skew the truth, not all mobile home gossip is 100% correct for the majority of mobile homes.
It is important to verify all facts before making unsubstantiated judgments that may write off an entire investing niche of real estate investing; potentially costing you thousands in financial profit.
Below are a few of the best mobile home questions I have heard over the years:
Do mobile homes attract tornadoes and hurricanes? Won’t any small act of nature just blow away a mobile home?
Of course not! Well… perhaps. If we were to place a mobile home and a traditional frame or block built home in a wind tunnel and crank the wind up, the mobile home would obviously roll-over first.
Since 1994 mobile homes have been built with the highest of guidelines and safety standards. According to the state of Florida’s website during the devastating hurricane seasons of 2004 and 2005 there were no significant structural damages to mobile homes built after 1994 reported.
Manufactured homes built after the 1994 safety changes are built to safety standards that allow for safe and comfortable mobile home living.
Surprisingly these 1994 improvements to safety and construction standards with mobile homes do not typically affect the overall monthly profit you can create with a particular mobile home.
Every dwelling is subject to violent weather, vandalism, insects, acts of God, etc. When all else fails get insurance to offset your worry. Over insure your mobile home and pass this cost to your tenant- buyers.
Aren’t mobile homes only found in southern states?
Mobile homes are located in every state except the District of Columbia. As of the year 2007 there were over 37,000 mobile home parks, each with tens or hundreds of mobile homes within each park. Add those numbers to the numbers found on www.statemaster.com to determine your state’s rank in mobile home abundance compared to other states.
Do I need a license to buy and resell mobile homes?
Most of the time when someone asks this question they are referring to buying and reselling mobile homes inside preexisting mobile home parks. Many states require a license be obtained only after a certain number of transactions (bought and sold) have been completed per any 12 month period per owner’s name.
Mobile homes inside mobile home parks typically rent the physical land each home sits atop from the park directly. Most states consider these types of mobile homes as personal property (not real property) similar to the Title on your car. Check your own state’s website to be certain of restrictions and exemptions.
A mobile home located on private land and outside of a pre-existing mobile home park will typically be sitting on land which will be bought and sold (by you) with the mobile home.
These homes (with land) are taxed as real property and therefore will require a yearly property tax be paid for land ownership. Investing in mobile homes attached to private land the same as you would a traditional site built property.
Don’t only lower income buyers live in mobile homes?
Amazingly this question has been asked to me more often than I would have thought possible. It is this negative mental roadblock that is keeping so many investors from profiting in this type of real estate. The answer to this question is of course a resounding “NO.”
Do not mistake someone paying a lower mortgage payment as being poor. New mobile homes can cost between $18,000 to over $130,000 for a large basic model, not including the land the home will sit atop. In 2005 number of small mobile homes in parks around California sold for over $1 million dollars each.
The clear truth is that there are millions upon millions of new and used mobile homes spread throughout the entire United States. Use the same quality scale that you have in your mind for “regular” houses to be applied to mobile homes.
The nicer the mobile home the more demand and higher cost you may charge for this home. My general rule of thumb when figuring out what to charge for a monthly cash-flow payment is to look at comparable apartment rent. A nice 2/2 mobile home will typically attract a gross monthly income equal to that of a similar size apartment or condo rent.
Warren Buffet has something to do with mobile homes right?
You heard it right! The king of Wall Street, Warren Buffet, invested 1.7 billion of his Berkshire Hathaway’s capital by purchasing Clayton Homes Inc, one of the largest manufactured housing companies in the world.