Investing in Manufactured Homes

Whether you call them trailers, mobile homes, or more accurately, manufactured homes, they're worth incorporating into your real estate investing plan.

Manufactured homes are the most affordable type of housing available therefore are, have been, and will be made by the millions each year.

Let's start by explaining the terms of this business.

Mobile home and manufactured homes are referred to as factory built housing units.

This is very important to remember when talking with a potential client.

If you say Trailers it will remind them of b-movies from the Seventies.

a. Mobile homes; are mobile housing units built before June 15, 1976

b. Manufactured homes are mobile homes built after that date.

c. Most mobile and manufactured homes are technically mobile because they have wheels and can be moved, the majority of them are installed on a site and never relocated.

Mobile homes can be located in parks or on private land.

Affordable housing in the United States has a tremendous appeal because land and buildings can be so expensive for the average person.

The median price of a site-built home in 2006 is $195,000 and the median price of a new manufactured home was $52,000.

When you consider that lots are anywhere from $30,000 to $100,000 that $195k is now up to 300k and out of reach for most people.

The Manufactured Home has become a more viable option for everyone from retirees, to small families who realize they need to have equity in something.

Stricter building codes, new technologies, and the quality of kitchens and bathrooms within the Manufactured Home, has given the quality of manufactured housing a boost.

This makes them more attractive to prospective buyers.

This in turn produces large amounts of these types of homes going through Foreclosures, pre-foreclosures, or people trying to upgrade to a ‘regular’ home.

Finding and Investing in Manufactured Homes

The opportunities for mobile/manufactured home investing are greatest in younger, smaller cities, the suburbs, and rural areas.

You are not likely to find mobile homes in big Cities; you will not have to go too far out of the cities to find a market for this type of affordable housing.

1. Study your market and test the waters by buying a few units.

2. Look for pre-owned homes that might need a little fix-up; they can be bought for a fraction of the cost of a comparable new unit.

3. Once you're familiar with this aspect of real estate investing, consider moving up to park ownership.

If you are interested in multi-unit residential units to rent, manufactured home parks are a great alternative to small apartment buildings.

What to do with them!

For the Real Estate Investor, manufactured homes generate the highest cash flow of almost any investment.

This easy to understand when you look at the reasons:

1. The market rents for manufactured homes are only slightly lower than for comparable site-built homes and because manufactured homes cost substantially less to buy it is a boon for Investors because the overhead cost is lower.

2. In parks, homeowners typically lease their lots from the park owner, who sets rules and regulations for the park, maintains the common areas, and may offer various amenities. In most cases, when a mobile home park is clean and nice the people never leave.

3. Think about our raw land and developing it with manufactured homes.

You get steady cash flow and do basically no work, just keep the place clean, you can have the owners of the homes cut their own grass so you only worry about maintaining fences and mail boxes.

4. You can rent out the land and buildings; sometimes there are manufactured homes that go on auction.

You pick up ten for under $50,000 and get a five acre spread put in pads for the homes then rent to own the homes and rent the pad space and you will have an instant cash cow for years, it’s a win-win situation.

If you are not familiar this wealth making market and have some bad idea’s about it, you will have to deal with those.

There are mobile home parks out there that fit the negative stereotypes you may have heard with problematic occupants and run-down facilities.

No though there are too many middle-income families and retirees choosing to live in these types of homes to ignore the Investing Opportunities.

These people take care of their homes and neighborhoods and are just like you and I.

Manufactured homes have never been more respectable and desirable than they are today, and that trend is likely to continue as on-site building costs continue to rise.