If you’re in the market for real estate properties to invest in, why not try looking at mobile homes? Mobile homes are prefabricated structures that are put together in a factory and then transported to sites such as trailer parks and camping grounds.
Also known as manufactured homes or trailers, mobile homes are versatile and can be used either as a primary residence, a vacation home, or more commonly, as a rental property.
While mobile homes have had a bad rap because of their portrayal in popular media, they are actually sound investments, and present good opportunities when buying to rent.
Here are some tips for buying and investing in a mobile home:
Do your research
Most mobile homes come in two types: the single-wide, which has a long, narrow, and typically compact design; and the double-wide, which has twice as much space compared to the single-wide, and feels more like a traditional single-family home.
Depending on their manufacturer, mobile homes can have different floor plans, as well as a variety of built-in features, such as multiple bedrooms and bathrooms, and even large, fully-equipped kitchens.
If you are buying a used mobile home make sure to check its overall condition — you want to get a well-maintained one, not something that breaks down once you tow it to its final location. A good tip when buying a new mobile home — especially when you plan on converting it into a rental — is to have an ideal tenant in mind, as this can help you focus on the features that you want in the property.
Take the time to look for lenders
One of the first things to do is secure a loan from a lender. Unlike site-built homes, mobile homes are generally considered to be personal property and not real estate. Because of this, banks might only offer you either a chattel loan or a personal loan, instead of a mortgage.
These loans often do not require collateral, and are much easier to procure compared to mortgages. The downside, however, is that lenders often charge higher interest rates for shorter terms, which can translate to higher monthly payments at your end.
You can also choose to apply for loans through the Federal Housing Administration loan program, such as Title I and Title II loans.
Whatever type of loan you take out, expect your lender to require you to hire a contractor to do a home inspection, in order to ensure that your home meets the U.S. Department of Housing and Urban Development (HUD) requirements.
Consider your mobile home’s location
Decide on your mobile home’s location beforehand. Mobile homes can be situated in a number of different locations, such as a tract of land you specifically bought for that purpose, or a plot of land in a dedicated mobile home park.
These options have their own set of advantages and challenges. For instance, having your very own parcel of land will give your tenant more privacy; this can be a big draw for many tenants. This option, however, carries with it the challenge of making sure that your property will be connected to utilities such as the city’s water, power, and sewer lines. The ease with which this can be done will vary depending on the location and the utility companies involved.
Dedicated mobile home parks, on the other hand, already have utility hookups in them which may be attractive to mobile home owners. Bear in mind this also means having to factor in site rental fees to the total rent you will be charging.
Hire a property management firm
Often overlooked, mobile homes are good investments. Not only are they very reasonably priced, they also promise good returns for their investors.
Tapping the services of a good property management firm can help you get reliable tenants. They’ll also do their best to provide you with shorter vacancy cycles. Furthermore, you should expect your property management firm to do what’s in their power to shield you from any costly and time consuming legal problems.
This is where Sundance Property Management comes in. A full-service property management company, Sundance Property Management is dedicated to helping new landlords with every aspect of the rental housing industry.