Mobile home investing might not be the first to spring to mind when you are considering investment opportunities. You may be thinking about transforming a run-down apartment as a renovation project, buying a new build, or a condo that has great rental potential. But, mobile home investment is an interesting option to consider if you are just starting your real estate portfolio. It has a significantly lower investment than in your typical brick-and-mortar real estate deal and it has the potential to be extremely lucrative (both as an investor and as a broker).
Mobile home investment is not considered by many as mobile homes have had a bad reputation and are often associated with trailer parks filled with poverty and crime (think of the movie 8-mile haha). Instead, think of it like this: millions of people can’t afford to buy their own homes these days (especially millennials with a ton of student debt). Many can’t even afford to rent apartments in towns and cities, but they still want relatively nice places to be able to live with their partners and families. There is a very good market for both sales and rentals, so mobile home investment could be the answer for these people (think how cool and popular the van life movement or tiny home movement is getting), and it could be the start of your very profitable real estate portfolio.
Investing in mobile homes will cost between $60,000 and $120,000, depending on what and where you are buying. As you can see, it is significantly cheaper to buy than an apartment complex or a typical house.
How to Start Mobile Home Investing
Investing in mobile homes can be done in several ways.
- Flipping: You can buy a mobile home, fix it up like you would a house or apartment (but for a fraction of the price), and then sell it at a profit.
- Create a Mobile Home Park: You could buy a piece of land a create a mobile home park – an excellent passive income opportunity. All you need to do is create the infrastructure – the legal framework, divide the land into separate plots and set up water and electricity supplies, and a road system. You won’t have any development costs associated with a normal real estate building project as the tenants just bring their mobile homes onto the site themselves. Obviously, this path is a lot harder of you’re starting out, but definitely possible if you’re willing to roll your sleeves up and take the time to do it.
- Rent out mobile homes: You can rent out a mobile home you acquire and create a passive income for yourself, and a wonderful home for a tenant. If you don’t want the hassle of the upkeep of the plot as the landlord, and if you are willing to invest in a piece of land, then you could rent out the land the unit is sitting on (a ground lease). This way the tenant is responsible for looking after the whole plot of land like they would a yard or garden in a traditional house. Or, you don’t even have to buy a mobile home. Just find a good plot and rent out that piece of land and the tenant can bring their own mobile home onto the site. It is worth bearing in mind that if you are buying land, it doesn’t necessarily have to be a large mobile home park. As mentioned above, you could buy a small private plot where someone can bring their mobile home. This is an attractive option to a potential tenant as it is far cheaper than renting their own house, but they have all of the benefits of having their own private space.
- Sell mobile homes: You find a supplier who will deliver and build the mobile home. All you do is market the opportunity and facilitate the sale. This is one of the most common ways of selling online today. The majority of online salespeople don’t touch or even see the products they are selling. They curate products that are manufactured by other companies. Why not do the same with mobile homes? (Think dropshipping or e-commerce)
Pros and Cons of Mobile Home Investing
Reasons to Invest in Mobile Homes
- Many investors overlook the potential, so there is a lot more opportunity available than in the very competitive, traditional real estate market such as houses.
- It will be a lot cheaper to start a mobile home investing business than it would be to build traditional houses on new development sites or to buy already established property for fix & flip. Buying in the traditional real estate market is simply much more expensive starting out.
- There is a huge demand for affordable housing, so if you are renting out mobile homes, you have a huge market ready and waiting.
Disadvantages of Mobile Home Investing
- Only around six percent of the US population currently lives in mobile homes, so the market is more niche than people looking for apartments to live in. It is far from the norm for someone to live in a mobile home. If you own a mobile home park, then it might be more difficult to find tenants to rent your plots. But, a true investor would see this as an opportunity to provide affordable housing opportunities for decent working families.
- You really need to do your research on the costs involved, particularly if you are looking at setting up a mobile park. It is not as simple as just buying some land, dividing up the plots, and renting them out. There may be hidden legal or infrastructure costs. There will be ongoing costs you need to take into account, including security, an on-site manager, or regular maintenance needed to maintain the plots and the site infrastructure.
Mobile Home Investing Strategies
Mobile home investment is what you make of it and that is the attraction for many investors. If you decide to create a mobile home park, then you can determine who you want as tenants to create the most attractive environment. For example, you could set an age limit for those who are renting on your land. It could be a retirement park, it could be for those over their 40s, it could be for families, etc.
Investing in mobile homes and creating a mobile home park will also bring you to consider whether you want to introduce other rules and regulations. For example, a no-pet policy, income restrictions, credit restrictions, and proof of a good rental history. These are all factors to consider when you are brainstorming mobile home investing strategies.
Invest in mobile homes in areas where there are lots of mobile home parks. When you are doing your research, find out how many parks are within a 50-mile radius of the area you are considering. The more parks close by, the more successful your investment will be as there is demand for your product or service.
Types of Mobile Homes and their Cost
When investing in mobile homes there are two types of homes to consider and you need to decide which ones you want to invest in – Singlewide and Doublewide. Singlewide units are usually between 14 feet and 18 feet wide and 52 to 80 feet long. A mobile home of this size will usually cost around $63,000 if you are buying it brand new. A doublewide unit will be between 28 feet and 36 feet wide and up to 80 feet long. Of course, you can charge more if you are renting a doublewide, but you will have a slightly bigger set-up cost as it is transported in two sections and the plot you will be setting it up on will have to be bigger, so you will probably be paying more for that plot. A basic double-wide unit usually just over $100,000 to buy brand new.
Purchase Process for Mobile Home Investing
Mobile home investing can be the beginning of an exciting part of your investment career. The purchase process can be quite different from investing in traditional real estate, but this is what you will need to be able to move a sale forward. First, you will need to contact the local DMV office to check on specific guidelines for that area. You will need to source the VIN, brand, year, and HUD plate. The HUD plate is the safety certification that is given to every mobile home when it is manufactured. You will also need the bill of sale and form 400 – the title registration proving the person who owns the unit is who they say they are – to be able to complete the sale. If someone is advertising a unit with a ‘lost title’, then be a little wary. But if it is a legitimate case, then a duplicate title can be sourced from the local DMV office. Once you have completed your sale, then you may have to move the unit to where you want it to be. Just be aware that you may need permissions, and inspections in the new location, and it will cost up to $5,000 to move it, so you will need to consider this in your budget when you are planning the sale.
Mobile Home Investing Red Flags
Investing in mobile homes is a business investment, so it is important to know what you are looking for if you are buying the actual units themselves. There are some red flags to look out for when you are on your hunt for a mobile home as you don’t want to be spending more money than necessary to get the unit up to the standard you need to rent it out or sell it. Here are a few pointers:
- Are the air conditioning units working properly?
- Is the roof in good condition? Check the lining for any leaks as water damage could be a very big repair job for you.
- Is there any water damage?
- Are the treads on the tires in good shape?
- When was the unit manufactured? You can tell this from the serial number that is given to every single unit. For example, 3122, means it was made on the 31st day of 2022
Mobile Home Investing Leads
Investing in mobile homes and finding leads for available units that come on the market or plots of land that could be used as mobile home parks can be done in several ways. Facebook groups are a great way to find out what is going on in mobile parks or local areas you are considering investing in. You can post notices in the groups or just monitor them for updates, and Craigslist is a good place to keep an eye on. But you can be more proactive and build relationships with everyone involved with mobile homes in the area. If you can get to know the location of mobile home inspectors, owners of mobile home part stores, mobile home movers, or mobile home park managers, then you will get to know the minute that a good investment comes on the market. It is also worth introducing yourself to good real estate agents in the area and asking them to forward any new listings they receive. By building relationships and networking, you will know exactly what is going on in your local market.
Next Steps: Mobile Home Investing
Mobile home investing can be a highly lucrative and less competitive market to traditional real estate investment and something that could be set up much quicker, so you start getting returns on your investment sooner. Have you decided if this is an area you would like to invest in? So, what are your next steps?
- Brainstorm what type of investment you would like to make – flipping, renting, or entire mobile home parks
- Decide on your target market
- Decide on the area you want to buy in
- Get yourself a good lawyer to help with the assessment of the legal paperwork and the setup of the legal infrastructure if you are investing in a park
- Source local companies who can help you with the infrastructure setup if you are considering a mobile home park – landscapers, road builders, sewage works, etc
- Start networking and creating contacts in the market
- Start inspecting units if you are buying to rent out or buying to flip, so you can really understand the quality and price of your assets
In Summary
Whether you are looking to invest in the whole park or individual mobile homes, there is no doubt that you will find everything you will ever need with these books to invest in mobile homes and secure your wealth for life.
I remember when I first set my mind to becoming a successful real estate entrepreneur, reading books were the fastest way to consume information. Now it’s even easier with Audible and Kindle because I can listen when I’m on the road or load dozens of books on a single device. I know you will become successful too as you have taken the time to get this far, cheers to your journey!
Before you go, check out my list sharing the Best Books for Investing in Mobile Homes