The Basics of Investing in Mobile Homes
Real estate investing, as a general phrase, includes everything from single- or multi-family homes to commercial high-rise office buildings. Mobile home investing is a less well-known niche specialization that falls somewhere in the center. Mobile home park ownership is only another investment option made available by real estate ownership, one that many real estate investors frequently disregard. If you're an active mobile home investor, you'll notice that some are situated in already-established parks for mobile homes while others are affixed to their private land. Mobile houses typically cost between $60,000 and $120,000. You can pay extra monthly fees if you choose a mobile home park. If you still need to, you will need a piece of land to build or park your house.
Reasons to Invest in Mobile Home Parks
- Housing options with affordable rent are becoming more and more in demand.
There will always be a market for inexpensive housing options and a demand for them, regardless of the economic cycle. More than 60 million individuals currently have household incomes below $20,000. Based on the government's recommended income-to-housing costs ratio, this sizeable group can only afford to spend an estimated $500 per month on housing. After considering their possibilities in this market at that cost, they are left with the decision between a low-rent apartment building and a mobile home park.
- Tenant consistency.
The idea that there is less tenant stability in mobile home park ownership than in typical multi-family properties is one myth. But first and foremost, a manufactured home is preferable because the term "mobile home" is misunderstood. These homes are not mobile in the sense of being easily transportable; instead, they are built in a factory before being delivered to the intended location. Therefore, these homes are anything but portable; moving one of them costs, on average, over $3,000 and necessitates the use of huge vehicles. Additionally, studies had revealed that most mobile homes are still in the same area as when they were first delivered.
Less opposition from competitors that want to build a new mobile home park from the ground up faces severe entry restrictions. It is challenging to secure the proper zoning, obtain the required permissions or licenses, and cope with other regulatory prerequisites in most countries. Along with the legal limitations, mobile home park developers must wait until a significant portion of the park's home lots is rented to break even or start generating cash flow. As a result, if investors are already investing in mobile homes elsewhere, new mobile home parks are easier to establish and offer less competition.
- Rise in depreciation
Investors can depreciate the usual apartment building investment over 27.5 years. In contrast, depreciable costs in mobile home parks are often the roads, utility wires, etc. These improvements, which are made to the land, can be written off over 15 years, giving investors a boost in depreciation during the initial years of investment.
How to Begin Investing in Mobile Homes?
- Purchase and sell mobile homes
You can purchase a house from a real estate professional who will give you a markdown in several ways. You might look for a mobile home that has been abandoned. You may take a drive and search for sales signs. Additionally, look through Craigslist or a real estate website like Zillow. The cost of a mobile home can vary greatly, with some larger models costing over $100,000.
- Rent out a mobile home and build a mobile home park
This is an excellent opportunity for a real estate investor seeking a more passive investment, as all you have to do is purchase the site, make a few minor modifications, and establish the legal framework for a mobile home park. Because your tenants are responsible for bringing their own homes to the site, you won't need to spend any time or money building the lots yourself.
- Use Ecommerce to gain attention.
Thanks to the eCommerce industry, entrepreneurial people now have new chances to sell products they don't even own by exporting them from the supplier to the client. These sellers only need to set up a website and a presence online; the manufacturers will supply the products they sell. Without having to construct the mobile homes yourself, you could use this corporate structure to sell them to customers.
Creating passive income is the primary goal of real estate investing. You may build a sizable and consistent revenue stream with a varied portfolio. It has become challenging to identify chances due to the competitive nature of the real estate market. Mobile homes have gained popularity as investors look for more opportunities to invest their money while working with agents. As with any other decision, you must examine the advantages and disadvantages before making an investment.