Mobile homes are pretty cheap to buy. A recent study published by the Federal Housing Finance Administration (FHFA) showed that manufactured homes on land appreciate similarly to site-built homes. The biggest disadvantage of mobile homes is the fact that they depreciate, and at a rapid rate too. These tenants usually stay for many years. A word of caution on this type of sale – you can quickly tie up your working capital in the notes receivable from your tenant buyers. We routinely purchase homes in mobile home parks, and on their land. This is a whole other topic, but it has very good returns associated with it. The same is not true for mobile homes, though. A typical 1,400sf, 3 bedroom, 2 bath rental home in Gilbert, Arizona can be currently (2018) purchased for about $250,000. Chuck started investing in, buying, renovating, selling, and flipping manufactured homes both in parks and on their own fee-simple lots. One month of lot rent may cost as much as you earn in mobile home rental income in two months. When investing in mobile homes, factor in that mobile homes will decline in value. Of all my rental experiences, I would say that mobile homes on their own land tend to be my favorite type of investment property. Will the COVID-19 Crisis Push Home Values Lower? It's also common for there to be structural issues since they sit on a frame instead of a foundation. A home purchased at this price will probably require about $10,000 in upgrades and repairs to get it ready for renting. Renting mobile homes has the potential to provide significant cash flow if you have the appetite for the risk. As an investor of both traditional single-family site-built homes as well as an investor of mobile homes, we find the mobile homes far easier to maintain. Mobile Home “Depreciation” Can Be A Myth. You will be lucky to break even on the rental income and will lose money on the home. Find Out Why! It can be very difficult to get a loan to purchase a mobile home. Our experience has been much different. Buying a Home in These 7 States Gives You the Most Bang for Your Buck, The Top 10 Hottest Demand Markets for Rental Investment in 2020, www.cafemedia.com/publisher-advertising-privacy-policy, Extensively researched articles in the areas of Real Estate Taxes, REITs, CREs, Regulation A and The Ascent's Best Cities for a High Salary and Low Cost of Living -- How Does the Real Estate Measure Up? However, many real estate investors never put serious consideration into renting mobile homes as an investment. Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing. If an investor overpays for any of the properties, the overall rates of return will be far lower. They tend to be far more “price sensitive” to the monthly rent amount than if the home was being sold on installments. Renters of a park mobile home also tend to be more nomadic and do not usually stay in the park long-term. $23,400 / $255,000 =, $10,400 + $2,500 = $12,900. – The bad. When we were finished, our all-in investment in the home was $98,000. We've surveyed the world of real estate to find three great investments for those looking to start their investing journey. See if others are already doing this and try to meet with them for advice. That sounds great, but is buying a mobile home a good investment? This is what I have discovered over the years: Buying Site-Built Homes Above The Median Price For The Area, Buying Site-Built Homes Below The Median Price For The Area. They're mass-produced in a factory and only have to meet Department of Housing and Urban Development (HUD) requirements, not local construction codes. We pretty much have to go through and / or replace every system in the home. When a mobile home is considered personal property, the land is assessed real property tax and the mobile home is assessed personal property tax. I say absolute value, because when a new mobile home is purchased there are farm more costs associated with it than just the cost of the mobile home. On the other hand, if the same entity owns both the mobile home and the land it sits on, it may be considered real property.