Get Rich With Mobile Homes

Does the myth that mobile homes depreciate in value keep you from investing in them? Well, they do lose value in a park, on a rented lot. Mobile homes with real estate, however, are an entirely different investment.

My mobile home doubled in value in the twelve years I lived in it. The home deteriorated a little (don't all houses?), but the value of the land continued to rise. Also, by renting rooms, I took in far more money from my home than it originally cost, and I was living in it!

Forget your prejudices and look at the numbers. In this town, for example, a two bedroom house rents for $800/month, and costs about $120,000. A mobile home gets $500/month, but you can buy one on real estate for $50,000 or less. The cash-on-cash return on investment is obviously higher with mobile homes.

What about the long term return from appreciation? House rentals here typically have negative cash flow, while mobile home rentals at least break even. Investors prefer houses anyhow, believing they'll build equity faster, but is that true?

Faster Equity With Mobile Homes

Buy a house for $120,00. Put $20,000 down, and you'll have a $100,000 mortgage loan. Amortised over 30 years at 6% interest, you'll have a payment of $599.60. Of the first payment, $500 will go towards interest, $99.60 towards principal. In other words, you only built equity of $99.60. I'm ignoring appreciation, but only for the moment.

Second scenario: Find a nice mobile home for sale, and borrow only $30,000, at 8% interest, amortised over 10 years. Note the higher interest - this is always the case with "factory built home mortgages." The shorter term is normal too, so you'll be done with payments in 10 years instead of 30.

Now, despite higher interest and a shorter term, the payment will be only $363.99. The first month, $200 will go towards interest. That means the other $163.99 goes towards principal. You bought more house (built more equity) in this scenario.

A mobile home on land might appreciate more slowly than the "regular" house, but faster loan pay-down covers this factor. Pay less per month and build more equity! Don't expect your real estate agent to tell you this. Don't expect him to even agree with me after you explain it. I sold real estate years ago, and math skills were not part of the licensing requirements.

Cash Flow With Mobile Homes

In the example given, you'd initially lose about $150/month on the house, after your payment, taxes, insurance repairs and other expenses. You'd break even or better with the mobile home, and after the loan is paid (ten years), you'd have a lot of cash flow, of course.

Mobile homes are cheap to maintain. The furnace died in rental I owned, the most expensive repair you'll have in a mobile. I replaced it for $1,200, much less than a furnace for a larger home. For $200 you can have a mobile home roof tarred, instead of $5,000 to re-shingle a traditional roof. Windows, plumbing, doors - they're all cheaper.

Property taxes cost less, because they're based on value, and mobile homes have a lower value than stick-built houses. Insurance will cost less too, because you are insuring less value. The only precaution to remember here is to be sure you can get insurance. Very old mobiles may be uninsurable in some areas.

The Bottom Line

Mobiles have their own problems. Renters who have to rent for less sometimes pay late, for example. These issues are minor compared to the advantages. Your twenty thousand could buy you two mobile home rentals, with ten thousand down on each, instead of one negative-cash-flow house, for example.

Take an honest look at the numbers. The two investors in my town that own most of the mobile home rentals always have cash flow, and have millions in equity now. Other investors, following their prejudices, struggle to make money with their "nice" rental homes. So don't automatically pass on those mobile homes for sale when you're looking for a good investment.

Steve Gillman has invested in mobile homes and other real estate for years. To learn more, and to see a photo of a beautiful house (not a mobile) he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

---

Is 100% Annual Return On Investments Possible With Low Risk Land Investments?

In last week's article, we discussed how substantial profits could... Read More

Selling Houses: Cutting Edge Design Tips for Selling

In this article, you're going to discover new techniques for... Read More

Buying and Selling Real Estate: Negotiating to Win-Win

You don't get what you deserve - you get what... Read More

Real Estate, Real Property and Leased Land; Definitions, Discussion and Explanations

Delaware, and the rest of the original British Colonies, has... Read More

Flipping or Fixing Houses for Profit

Many real estate investors make $5,000 to $10,000 or more... Read More

How Much Should I Pay For This House?

We probably answer this question for someone a couple times... Read More

Prepare Your Property Like A Pro And Boost Profits

The housing market is hot, and you've decided to list... Read More

Real Estate Investing - Books,TV Infomercials, and Seminars

Real estate investing has become popularized today because of real... Read More

Questions You Always Wanted To Ask A Master Builder But Never Had The Chance

Building a house (or lots of them) seems to be... Read More

Foreclosure Home Deals

Did you know that you can save tens of thousands... Read More

How to increase the Saleable Value of your Home

When selling your home, you'll want to fetch the best... Read More

11 Steps Away From Buying a Home

There is no doubt that the market for houses has... Read More

Selling Your Property Without An Estate Agent

It is possible to save £1,000s selling your home privately... Read More

Sell Your California Home For Top Dollar

HOW TO SELL YOUR HOME FOR TOP DOLLAR1. Make your... Read More

Curb Appeal

First, lets start with what it is. Curb appeal is... Read More

Buying a Home with Zero Down Payment in Irvine, CA

Years ago, the only person that could buy a home... Read More

Investment Real Estate: An Inexpensive Way To Get Started

If you are considering getting involved in investment real estate,... Read More

5 Things to Look for in a Property Appraiser

Homeowners who are seeking a property appraiser often ask "How... Read More

5 Steps To Choose the Best Cincinnati Realtor

Excluding some professional real estate agents buying a house is... Read More

FSBO: For Sale By Owners Chapter One

She reached the phone on its second ring. "This is... Read More

The Pros and Cons Of Hiring A Real Estate Lawyer

You're travelling in a foreign country and you get arrested... Read More

Protective Covenants ? Buying A Home

In addition to zoning, some properties have covenants recorded at... Read More

Understanding Real Estate Terminology

Purchasing a home can be a complicated and confusing process,... Read More

Spanish Estate Agents and Inspection Visits

The only way to buy a home in Spain is... Read More

A Log Home Story

Solving problems while maximizing valuesThis story has a few good... Read More

How to Make the Real Estate Market Work For You and Get The Most Money

How to make the Real Estate market work for you... Read More

Buying A Holiday Home in Rural Ireland

Ireland has recently witnessed an upsurge in the number of... Read More

Real Estate Investing in Rentals ? the $10 Million Real Estate Investing Mistake

Renting to tenants is no longer "where the money is"... Read More

Selling Investment Houses: Psychology of Mirrors

Discover new interior Design Psychology strategies to increase your real... Read More

Build Your Retirement By Investing In Real Estate

Most people buy one or two properties. One is their... Read More

Home Staging Strategies

Who are you preparing your home to sell to?You, as... Read More

When Showing Your Home

Here below are some of the reasons why buyers may... Read More

Real Estate Development Feasibility Study (Income) - $1.2 Billion Developer Tells You How To Do One

There are two sides to a feasibility study and in... Read More