Buying a mobile home is quite different from the traditional process of buying a house. Apart from the sources of financing, another distinct difference lies in the ownership of the home and the lot it is on.
If you intend to put your money into this particular residential type (also called a manufactured home), just check out this mobile home buying guide below and get some useful tips for buying a mobile home.
Mobile home types and space considerations
The two most common mobile home types are the single-wide and the double-wide manufactured homes. There are also triple-wide mobile homes that are rarer to find but provide more wiggle room inside.
A manufactured home is space-efficient with rooms already connected, unlike in a traditional home where a hallway separates rooms from each another. A double-wide mobile home, meanwhile, is around the size of two single-wide units. This makes it look more similar to the standard single-family home. Space is one crucial factor to consider when thinking of ideas for decorating a mobile home.
Real estate ownership or rental
As mentioned earlier, a major consideration in choosing a mobile home for your next real estate investment is hinged on the ownership of both the lot and the structure to be placed on it. You have the option to either buy or rent the lot where you plan to put your new manufactured residence. Only after you’ve completed this investment do you purchase the home itself.
Package deals for mobile home purchases vary depending on the location. In many rural or suburban areas, there are land-home package deals available where the monthly mortgage pays for both the mobile home and the private land that the home is on. Meanwhile, in urban areas, owners of manufactured residences can rent lots in strategically located mobile home parks.
Financing requirements for a mobile home purchase
Most financing for manufactured homes comes from credit unions or a mobile home sales company as not too many standard lending institutions offer loans for mobile homes.
There is also a “shelf life” for mobile homes as the maximum number of years that a mobile home can be resold is up to 15 years. After that, you’ll find lesser lenders offering conventional mortgages for these older homes.
If you want to take advantage of a government-backed loan for a mobile home, you have to make sure that it has not been uprooted from elsewhere.
There’s one thing common between a standard single-family home and a mobile home, though – lenders will want to have a home inspection conducted on the abode (in the case of the mobile home, it’s a foundational inspection) before finally approving a loan. Not only will results of this inspection reveal minor and major defects on the home but it will also tell you if the price offered by the seller is worth it or requires further negotiations.
Mobile homes are a budget-friendly option for owning a home. Home buyers can buy the manufactured residence and just rent the lot on which it stands. Even down payment rates are lower (approximately 5% base price) for a manufactured home than a regular single-family home.
With the money saved from the mobile home purchase, the owner can use this to invest in amenities that will make the home smarter and more energy-efficient. In fact, they can go all the way and buy a shiny new mobile home that would still cost less than a resold single-family home.
While you can have a mobile home of your own at a very affordable price, there are certain risks to consider.
Mortgages taken out for this type of housing may allow for up to 100% financing, especially if the said mortgage falls under the USDA Rural Development Program. However, you may have to contend with higher interest rates for such loans as mobile homes are seen to carry a higher risk.
To serve as a buffer in case of unforeseen events like fire, natural disasters, or loss stemming from theft, your lending institution will require mobile-home insurance on top of the loan.
The depreciation factor
Keep in mind, too, that in any kind of construction, depreciation will occur over time. This should be taken into account when looking into the value of one’s home. However, manufactured residences take a bigger hit especially since most are priced separately from the property that these are standing on.
The good news is that after 1976, manufacturing standards of these mobile homes were raised and their values became more stable. Now, just like your regular single-family home, location will affect your mobile home’s value more than its ownership status – whether you’re renting the lot on which your home stands or you own it.
Make sure you know all there is to know about investing in a mobile home by talking to the top property management experts in the Great Lakes and Southeast regions, Sundance Property Management. Get in touch with us here.