Home flipping is a common theme of HGTV, but you never see mobile homes on it. But that’s a shame because investing in mobile homes can be a very profitable venture and the cost to get into this sector can be under $1,000. In a business where the strategy is to buy low and sell high, you can’t buy housing units for less than mobile homes, and that makes the upside enormous. So, what makes mobile home investing a profitable venture?
Sellers are desperate and prices are low
When an owner sells their mobile home, it’s typically caused by some type of pressure, such as loss of a job or a divorce, or even settling an estate. In these cases, the seller does not have much time to properly advertise or market the property (if they even know how to do that) and are willing to take very low amounts of money for that. In addition, they typically have no debt as the average length of residence of a mobile homeowner is 14 years and the longest mortgage on any home 1990 or older is 10 to 15 years. Since they have no mortgage to worry about paying off, the price can be anything you can negotiate.
Competition is almost nonexistent in most markets
Another reason that mobile home prices are low is that there are few buyers for this asset type. Most Americans find single-family home flipping appealing but the U.S. stereotype against mobile homes and their occupants (the slang term is “trailer trash”) keeps most investors from even seriously considering this type of venture. Based on the law of supply and demand, when there are fewer buyers, the price always comes down. This makes mobile home prices extremely low.
An imperfect market creates perfect positioning
Since few people are buying mobile homes and most sellers have absolutely no idea what they’re doing, it gives an extremely attractive open playing field of opportunity. If you can buy a mobile home for $1,000 there’s really no way you can go wrong, as the demand for affordable housing is extremely large. In many ways, the mobile home investor is acting simply as the middleman between the seller and the buyer – only with a commission that is much higher than any realtor.
The many options to make money
There are many different ways to make money with a mobile home including:
- Buy it cheap and then clean it up, advertise it, and sell it at a large profit for cash.
- Buy it cheap, do a full remodeling, and sell it at a larger profit for cash.
- Buy it cheap, remodel it, rent it out, and keep it as a rental property.
Because there are so many different methods to approach the business model, it is extremely adaptable to the market and your goals.
Another benefit of buying inexpensive mobile homes – as opposed to expensive single-family homes – is that you can have a diverse portfolio for the same amount of money as just one house. As we’ve seen with Covid-19, not all markets are created equally, and there is strength in not having all your eggs in one basket.
The endless demand for affordable housing
Regardless of which mobile home market you invest in, one trait of mobile home investing is identical across America: the high demand for affordable housing. A simple ad on Craiglist can garner ten calls a day. That’s because the average single-family home in the U.S. is around $200,000 and the average apartment rent in the U.S. is around $1,200 per month. That makes the average mobile home in a mobile home park the best value in America, and one that no other form of housing can match.
And the best product to meet this demand
And beyond price alone, mobile homes offer some definite advantage over apartments including:
- No neighbors knocking on your walls or ceiling.
- The ability to park by your front door.
- A yard of your own.
- Stable residents with a strong sense of community.
- The ability to be a homeowner.
Even if mobile homes were the same price as apartments – which they’re not – the benefit to living in a mobile home would make them enormously attractive.
Investing in mobile homes allows you to participate in the huge demand for affordable housing at an extremely low price point and with little competition. It can be extremely profitable, low-risk, and a great way to create a strong additional income stream or nest egg.
by Frank Rolfe