If you thought that mobile home investing was just for slum lords, and not worth it…think again! This market is big, and there’s room for you to get your slice of the pie. But before you can make money investing in mobile homes, you’ll need to get these three things down first. So here are the 3 reasons why mobile home investing slaughters traditional home investing.
1. The Risk is Far Lower
This is the number one reason for investing in mobile homes over regular on-site built homes. You can buy the properties much cheaper, and still rent them out for a fabulous profit. In my market, a typical on site built home may be $80k – $120k, while I might only spend $20k – $50k on a nice double wide mobile home with the land included. So let’s just say you can get the trailer for an average of $25k versus the average on-site built home for $100k. That means you can buy 4 mobile homes for every one on-site built home!
2. The Reward is Insanely Higher
Going back to our example, you will probably be getting 2/1 or 3/2 trailers for this price range, whereas you will probably be getting 3/2 or 4/2 on-site built homes for their price. While you may be able to rent out the on-site built homes for, say, $1,000 per month, you will also be paying somewhere between $800 per month, leaving you about $200 per month in profit. Not bad.
But with the trailer, you may only rent it for $600 per month, but your payment will only be about $400 per month. You’ll get the same $200 per month in profit, only now you can do 4 times as many deals, and instead of paying for 30 years on a note, you’ll only be paying 10 years! So think about it, same profit, 20 years less to a pay off, and 4 times as many deals…are you starting to get the picture?
3. While the Mobile Home Depreciates, the Land Will Appreciate
Here’s something really beautiful. Especially if you can acquire these properties all in the same area. If you can buy enough of them, rent them out for a period of time, you can then sell just the trailer itself (not the land) to the buyers, and turn the location into a mobile home park, or…work a deal out with your tenants/mobile home owners to move out of the area, then you’ll have the land paid off, and you can do something else with it entirely! Make it into a nice home area and sell the homes, or whatever you can think of. The point is, the land will be worth more, and you will have enough of it to do something different with it, if you choose.
So the bottom line is, mobile homes are cheaper, you can get very close to the same amount of cash flow, and then you have the option to do something entirely different with the property if you choose to do so at some point in the future. And being able to do more deals with the same amount of money is great leverage, and you can use it to fast track your investing success…