Mobile Home Investing is very similar to other
types of investing in rental property, with of course a few
differences!
The first, and main consideration is if the Mobile
Home is located in a managed park. If so, you MUST contact
the management before buying the home. Why? Well
some Mobile Home Parks do not allow any of their residents to rent out
their homes.
The managers and owners want the people who live
in the park to be of a certain caliber, they want people who care about
their homes and keep them up to a certain standard. Your tenants will
not have too much at stake and therefore may not care for your property
like you would.
Make sure that you follow these rules and do your
homework!
However, once you determine that it is ok to rent
the home out, or if you own the land the home sits on, then Mobile
Homes investing makes perfect sense.
This is due to their low cost. Mobile
Homes typically will cost much less than other single family residences
of comparable size, rooms, and bathrooms.
Watch this video on MH investing
Something to keep in mind:
Upkeep will be more important with a Mobile or Manufactured
Home - this is because of the nature of construction, the easy of minor
problems becoming major problems, and the foundations normally used.
Make sure that ALL leaks are repaired immediately.
Your successful Mobile Home investing demands this.
Drawbacks to Mobile Home Investing
Mobile and Manufactured Homes are considered
Personal Property - not Real Property. Therefore, they will
fall under personal property laws, however, the habitability laws are
also in effect. So, do your homework in this area.
As a landlord, you must comply with all habitability laws and
codes: heat, water, leaks, safety issues, etc. are of the utmost
importance - do not expect to provide sub-par living conditions and get
away with it. The Personal Property laws put the
responsibility on the owner much more than Real Property laws.
You must provide a home that meets all the health and safety
codes in place when it was built, with other upgrades to safety, such
as smoke detectors in every room.
Another drawback is financing - Mobile Home
financing is hard enough without adding the issue of non-owner
occupancy. Finding a lender to finance a Mobile or Manufactured Home
that will be rented out is near to impossible. We are
researching this now, so check back if you need financing.
Basics of being a landlord
Hopefully if you are interested in Mobile Home
Investing you have already explored how to go about buying a property
to rent out, areas that would be good for a rental, what your budget
is, and what contract you would need. But if you need the
basics covered, check out this link for more information.
Mobile Home Investing using Lease Options
One way to buy or sell a Mobile Home is with a
Lease Option (also known as a Lease Purchase or Rent to Own).
This site is not set up to go into the exact process of how
to do this, why, how to protect yourself, and how to profit
using this technique, so for more information on this topic check out
this professional source. But here is a simple break down of
the process and why it is beneficial in a lot of cases:
Lease purchase as an owner
If you own a property and you want to sell it,
consider a lease
purchase - you agree with the buyer to lease the property to them for a
specific period of time for a certain amount of rent. Normally this
amout is slightly higher than market rent with the extra (some or all)
going towards the purchase price when they buy. There is also
an
option to buy agreed on, which pre-determines the purchase price ahead
of time. There may or may not be extra money paid for this
option
(called option consideration). Then, between now and the end
of
the lease term the buyer has the right to buy at the agreed on price,
or walk away at the end of the lease period. Why this is good
for
you as an owner: You get higher than market rent, and
hopefully
option consideration. If the buyer buys, then you profited
while
leasing and when you sold. If the buyer walks, then you
profited
while leasing and you keep the option considation, and now you get to
do it all over again!
Lease purchase as a buyer
If
you are looking to buy a property (or Mobile Home Investing), consider
a Lease purchase - you agree
with the seller of a home to lease the home for a specific period of
time for a certain amount of rent. This amount could be
higher or
the same as market rent. Try to get the seller to agree to
apply
all or most of the rent to the purchase price if you end up buying the
home. Try to get the longest period of time on the lease that
they will allow.
Now, you will also be optioning the home to
buy
it in the future - you could exercise this option right away, or at the
end of the lease period (if you find a buyer for higher than what you
agreed to, this might work out well!). Try to get the option
consideration as low as possible, but if you have to pay some, the make
sure the seller will apply it to your purchase price.
Finally, you
don't have to buy at all, you can walk if you don't like the place for
any reason. This makes the risk on your side so much less -
you
get to live in the property and completely check out the neighborhood
and the home before fully committing to buying it.
Successful
Mobile Home Investing will require you to be flexible in your buying
and selling methods. Using a Lease Purchase is just one more
way
to get this done with a lot of flexibility. By Will Cunningham
Additional Manufactured Home Info
Here are some related topics, click on the
underlined words for more information.
