Mobile homes

Thinking about buying mobile homes as a rental property. Any one have any experience in this? I found a trailer park that allows subleasing and there is a trailer for sale for roughly 24,500 and from what I understand I could rent the thing out for about 400 bucks a month. Ideally I’d get a single family home or a duplex but the price involved is a tough pill to swallow.
Thanks guys!

 

Renting the trailer or the lot?

 

I’d buy the trailer, I’d have the tenant pay the lot fee

 

Trailers as nice as they may be these days are still depreciating assets, hard to find a good reliable renter who won't further depreciate a trailer's value and at only 25k for one I suspect it's already used up and the people it will attract won't treat it well.

Me personally wouldn't think it would be worth it, more like buying into a headache especially if you don't own the lot.

 

Pros of renting mobile homes as an investment

1. Low cost of entry
One of the most attractive things about renting mobile homes is that they cost very little compared to other property types. While a brand new mobile home out of the factory can cost almost as much as a standard home, investors are often able to purchase second-hand mobile homes for under $10,000. In some cases, people are willing to sell their mobile home for less than $1,000 just to get out of paying their lot rent.

The low cost of purchasing a mobile home makes it easier for some people to start investing in real estate. With some legwork, somebody can start investing in mobile homes for under $5,000.

2. Higher ROI
When the initial investment is low, the potential return on investment (ROI) is high.For example, if you purchase a mobile home for $2,000 and net just $100/ month after lot rent and expenses, that's a 60% return.

3. Costs less than building
If you have a piece of vacant land, placing a mobile home on it may be a much cheaper option than building a house. However, you'll need to check local ordinances to see whether you're allowed to place a mobile home on the land.

Cons of renting mobile homes as an investment

1. Mobile homes don't appreciate
One of every investor's favorite things about real estate is that it almost always appreciates over time. Even if a property doesn't have much appreciation, it rarely loses value over time.

The same is not true for mobile homes, though. A manufactured home is a lot like a car in the sense that the value begins depreciating as soon as you buy it. You'll rarely ever sell a mobile home for as much as you've put into it.

The cost of a mobile home is more of an expense than an investment, because you'll rarely get your original investment back. Renting mobile homes is all about cash flow.

2. Mobile homes are high maintenance
Most manufactured homes aren't built to the same standard as stick-built homes. They're mass-produced in a factory and only have to meet Department of Housing and Urban Development (HUD) requirements, not local construction codes. Mobile homes begin to wear out after time and require a lot more maintenance than most other types of homes.

3. Lot rent
If your mobile home is parked in a rented lot, you'll have to pay the lot rent whether you have a tenant or not. When it comes to renting a mobile home in a park, the lot rent usually makes up the majority of the rent payment. One month of lot rent may cost as much as you earn in mobile home rental income in two months.

4. Difficulty financing
It can be very difficult to get a loan to purchase a mobile home. Financing mobile homes is a large risk for a bank because of how quickly they lose value. If they're in a mobile home park, they'll also have the burden of paying the lot rent if they have to repossess the home.

However, since mobile homes can be purchased so inexpensively, you can often buy them without needing bank financing.

 

I don’t think it’s a great idea. I definitely don’t think you should do it if you have to finance anything, and $25K is a lot of cash for depreciating trailer. You should figure out the expected ROI and how long it will take you to recoup your investment after all the expenses. Then look at alternative investments to see what you could do with the same money over the same time period. Without doing any of the math at $400 a month, minus expenses, I doubt it will be the best investment.