Are Mobile Homes a Good Investment?
Would You Live in a Mobile Home?
What is the first thought that comes to your mind as you ponder the question as to whether you would live in a mobile home? Before you answer, read on. If you're not sure and don't want to jump to any conclusions with a resounding "No," then you may not understand what they are truly like as a home or as an investment vehicle.
Your best source of information starts with somebody that has actually lived in one. But foremost, seek the advice those that have been in the business.
I run my own mobile home permit service and and have coordinated over 2000 projects from the soil up for several different mobile home dealerships in North Central Florida. It all began in 1998, the same year I purchased my first mobile home.
It is my intention to share what I have learned about manufactured housing so that I may feed your curiosity. Listed below are several reasons why manufactured (mobile) homes are purchased and what you might expect.
Six Basic Reasons Why People Purchase Mobile home/s
- Affordable living
- As a temporary residence while building a site built home on their same lot
- For rental investment purposes
- To accommodate a family member with a second dwelling on their property
- To refurbish and resell for profit
- To replace an old existing mobile home with a new one
In the summer of 2007, Billionaire Warren Buffet, through Berkshire Hathaway, invested $750 million to buy out Clayton Homes, the nations top manufacturer of mobile homes. Now there's somebody that has an interest in this prefabricated housing market. Manufactured homes are precision-built indoors under dry conditions and void of damaging weather and numerous delays.
In 1998 Nancy and I were living in a two bedroom apartment. One day while perusing one of those "buyers magazines" and happened upon an ad that read; "Own your own home and property with a double-wide for $399 per month." At first I thought I would never live in a mobile home. But living on land in the country appealed to us. Additionally, $400 was about half of what we were paying for our apartment.
Soon we went searching for land to see what kind of bargain we could get. After only a few days of searching, we purchased an acre of land for $9000 in a nearby county. We put $100 down and the payments were $100 a month. At first we thought we would build a site built home, but we couldn't come up with the funding. Then I remembered that ad in the magazine for a mobile home and land. We visited several mobile home dealerships and were impressed with the overall quality. It was certainly much nicer than our apartment, so we decided to purchase a "Fleetwood" double-wide mobile home..
It was a 3-bedroom, 2-bath double wide with 1700 square feet of living area. Our salesman combined our land with the mobile home creating a land-home-package. Our monthly mortgage was $502 per month for 30 years.
We had a plenty of room to,spread out. The thing I loved the most was the peace and quiet and gazing at the stars. They were so brilliant. Owning our own home and saving nearly $300 per month was just the icing on the cake. We lived there 8 years and sold our mobile home in 2007 and made a $40K profit. The key to earning the profit is to take pride in the upkeep of the home. Many fail to do this and that is why we see so many dilapidated eye sores out there.
As a Temporary Residence While Building a Site Built Home
Occasionally I run across customers who have future plans to have a site built home on their property, but for the time being they want to live on the land during the process. So in the interim they purchase a mobile home and live on the land until the construction of their new home is completed. This affords them the opportunity to either build the home themselves, or enjoy the building processes by a Building Contractor. Once their site built home is completed, they either sell the mobile home, rent it out or house a relative--if the zoning laws require it. Many jurisdictions will not allow a second home on a property, so if your intention is to leave the mobile home where it sits, make certain the county will allow it.
For rental investment purposes
Often time I am called to coordinate projects for real estate investors. Their plan is to buy a used or repossessed mobile home (repo) and set it on a lot, add a well, septic and power and put it either on the market to sell or rent. Generally, they attempt to sell them first. But if that fails, their back-up plan is to rent them out.
There is some sort of magic about piecing everything together and then selling it as a whole. In many cases these investors, double, even triple their initial investment once the property is sold.
To Refurbish for Resell
Some old mobile homes are free for the taking. All you have to do is transport them to a place where you can make it sparkle. There are many folks out there that buy old mobile homes, completely fix them up and resell them for profit. It's hard work and does require some construction skills. But before you try this, beware that many states have wind zone codes that you must adhere to. Check to see what the wind zone is for your area before you consider taking on refurbishing one of these homes. Also, you probably need a permit to bring it to your property.
Most mobile homes have what is called a wind zone plate. It is actually an 8.5 x 11 inch sheet of paper that can be found in a master bedroom closet or perhaps under a kitchen sink pasted to the inside of a cabinet. This plate has critical information on it such as the serial number, make and model, date of manufacture and the wind zone plate where the home is allowed to be set. Sometimes, over the years these plates are painted over or the kitchen cabinets are replaced. The best thing to do if this is your case is contact the Department of Motor Vehicles & Highway Safety. Ask them what you can do to fix the problem. Now some counties won't mind that you don't have a wind zone plate, but always check first.
To replace an old existing mobile home with a new one
About 50% of my business deals with what is called a replacement mobile home (re-hook). Your utilities can become part of this change. Some older or smaller mobile homes may only have a power pole that is rated for 150 amps. However, most newer homes are out-fitted with 200 amp service.
It is far better to completely replace an old power pole rather than upgrade it to 200 amp service. Most electricians build 10-15 poles (ahead of time) to accommodate their schedules. You really won't save by investing in your own power-pole.
Are mobile homes a good investment? For the various reasons explained...Absolutely!