5 Ways to Make Money Investing in Mobile Homes 27

14
Shares71
BY JOHN FEDRO UPDATED NOVEMBER 23, 2014 INVESTOR FINANCING &
CREATIVE REI
I had the great fortune to talk with some great real estate investors this week
at a local REIA meeting. After the meeting concluded I hung around and
began mingling with the locals, no one amazingly had ever invested in
manufactured housing. I spent the next three hours regaling a group of doe
eyed newbie investors about the past successes and failures while mobile
home investing.

While describing the mobile home business I realized that there are so many
ways to make money with mobile homes. Even within this small niche of
mobile home investing there can still be multiple ways to profit.

Fast Turn: This one goes by many names. Anytime you purchase a property
with the intention of fixing and re-selling it for substantial profit you are fast
turning the home. Mobile homes with their easy-to-fix design and simple
framework can significantly less costly to repair than traditional site built
homes. Undervalued and underrated used mobile homes can be purchased
for a fraction of their retail price. This may mean that you are able to
purchase a newer model mobile home for only a few dollars per square foot,
leaving thousands of dollars in equity for you.

You cant eat equity. Mobile homes can be notoriously difficult to arrange
conventional financing for. (See my past article: Mobile Home Financing) It is
for this reason typically only newer aged mobiles attached to real property
qualify for conventional financing. Selling your invest mobile home for all
cash is possible, this is particularly popular in tourist destinations.

Wholesale: Mobile home wholesaling is the process of selling contracts. You

are able to get Seller Janes mobile home under contract to buy for a steal.
Since you do not buy mobile homes yourself, you call a friend who does.
Mobile Home Mitch who loves cash-flowing used mobiles offers to pay
$3,000 over the contract price for the home. You assign your contract to

Mitch and profit $3,000 at closing.

There are wholesalers for everything; traditional real estate, cars, fish,
flowers, REOs, and yes even mobile homes. When unwanted mobile
home sellers call in response to your We Buy Houses marketing, hold onto
these leads that may not meet your criteria. They may just make you money
after you give them to a seasoned mobile home investor.

Ants: Also known as bird dogs, becoming an ant provides a great needed
service to mobile home investors. Typically mobile homes can populate a
certain location or area of town. Negotiate a deal with an active mobile
home investor, perhaps he/she pays you per qualified lead. Your job is to
drive these mobile home areas, snap pictures, take notes, get addresses and
jot down FSBO phone numbers.

(Rent) Buy & Hold: Is your dream to become a landlord? To own countless
properties? To know that your tenants will be paying for your upcoming
cruises and childrens schooling? Renting property has brought many real
estate investors countless fortunes. The problems with rentals is that they
come with their renters, and renters bring their renters mentality.
Anyone who has ever dealt with children can relate to handling renters on a
day to day basis. Properly screened and a thorough background check can
eliminate most rental problems before they start. Also an experience
property management can be worth their weight in gold.

(Owner financing) Buy & Hold: Whether you sell your investment mobile
homes with a lease to option, land contract, rent-to-own, or simply create a
promissory note, you are intending to sell your mobile home for payments
overtime. Instead of collecting a one-lump sum when you sell your newest
mobile home acquisition, you can choose to accept the purchase price in
monthly payments plus interest. A size-able non-refundable down payment is
usually paid to you as consideration for the tenant/buyers opportunity to
purchase the home one day.

So remember, if you drive down the street and notice a mobile home
community, take a drive through. The next time you get a half day free from
work, take the kids and check out the mobile home area of town. Start

looking for deals and maybe youll be the next mobile home superstar.

Happy Investing,

John Fedro

Free eBook from BiggerPockets!

Real estate biginner's guide from BiggerPockets

Join BiggerPockets and get The Ultimate Beginnner's Guide to Real Estate
Investing for FREE - read by more than 100,000 people - AND get exclusive
real estate investing tips, tricks, and techniques delivered straight to your
inbox twice weekly!

Actionable Advice for Getting Started,

Discover the 10 Most Lucrative Real Estate Niches,
Learn how to get started with or without money,
Explore Real-Life Strategies for Building Wealth,
And a LOT more

Sign up below to download the eBook for FREE today!

Click Here to Download the eBook Now!

We hate spam just as much as you
14
Shares71
ABOUT AUTHOR

JOHN FEDRO Website Twitter

John Fedro has been investing in manufactured housing since 2002. John now
spends his time continuing to build his cash-flow business in multiple states
while helping others enjoy the same freedom he has achieved. Find John
here.
RELATED POSTS

subject-to-real-estate
AUGUST 1, 2016 77
Why a 30-Year (NOT 15-Year) Mortgage Gives You a Better Shot at Building
Wealth

newbies-wholesaling
JULY 26, 2016 54
The Dave Ramsey Dilemma: Should Real Estate Investors Really Avoid Using
Debt?

keller-williams
JULY 19, 2016 1
3 Ways to Attract Private Capital to Your Real Estate Deals

27 COMMENTS

CAROLINE MOORE on MAY 2, 2010 6:25 AM

The older, inexpensive mobile homes and mobile home parks are still one of
the best income-producing businesses I know of. It doesnt matter what shape

the economy is in, people still need affordable housing.

REPLY REPORT COMMENT

JOHN on MAY 6, 2010 6:09 PM

Hi Caroline,
Shhhhhhh, dont let the secret out! Lol. It is getting more and more difficult
for the average family to find affordable housing. There will always be a
market for homes for sale in the tens of thousands, rather than the
hundreds of thousands dollars. Thanks for commenting.
John

REPLY REPORT COMMENT

RHONDA O, on JUNE 18, 2012 5:16 PM

Thanks John very helpful!

I receieved a email from a motivated seller who wants to sale her mobile
home. I thought this would be hard until I read your article. I am a wholesaler
that is unfamiliar with mobile home investing! If you dont mind answering a
few question I was wondering how do I determine the value, and what should
I base my offer off of? Is it the norm based of the comps in the area?
Is there a type of mobile home that I should stay away from?

Thanks Rhonda O,

REPLY REPORT COMMENT

JOHN FEDRO on JUNE 19, 2012 2:45 PM

Hi Rhonda O,

The price and terms you offer to any seller of a mobile home will be
determined by your exit strategy. You mentioned that you are a wholesaler so
I am imagining that you are planning to quickly line up a buyer for this home.
As a rule of thumb aim for 50% ARV minus repairs minus your wholesaling
fee. Use real local MH comps nearby.

However if you are looking to put together a good owner-financing or subjectto the mortgage type deal (and then wholesale this type of deal) you may be
able to offer 80% for the home and still make it attractive to a landlord type
investor.

Hope this helps. Either way you will likely be one of the only investors making
a viable offer to purchase this home.

Best,
John

REPLY REPORT COMMENT

DOUGLAS W. on SEPTEMBER 11, 2012 8:33 PM

Recently found a motivated seller that is moving out of state and wants to
sell their mobile home but it is in a park. Is there anything I should consider if
I want to resell the home? My fear is that a mobile home in a park may be
worth less than one on its own land. I need help determining if it is even
worth purchasing from the owners.

REPLY REPORT COMMENT

JOHN FEDRO on SEPTEMBER 12, 2012 10:02 AM

Hi Douglas,

Great you are pursuing mobiles in parks. Sellers moving out of state can be
highly motivated if they need to move in the next 90 days or less. If the seller
must move in 30 days or less then act fast as this seller will likely sell to the
first buyer with cash or terms.

With that said your idea about the mobile home being worth less then a
home with land, you are correct. This is why youll likely purchase this
complete home without land for less than $4,000. Ideally this first deal is a
3 bedroom.

Dont let the low appraised value of the home keep you away from doing the
deal if the rest of the numbers work out. Numbers such as; other homes for
sale nearby, park condition, home condition, seller motivation, fall season,
resale value, cash-flow potential, holding costs, price, terms, etc.

With regards to your question about offering a purchase price to secure the
deal and also purchase at the lowest possible price, this is a subject I have
written and recorded much about in my course. However here is some advice
to keep you safe, control the title, and make a profit 1. Find the sellers
needs, not his/her wants but his/her needs (such as; need $2,780 to move
and pay off bills). 2. Give him/her those needs if possible 3. Compromise until
there is a win-win-win deal. Aim for a purchase price under $4,000 (unless
you plan a quick wholesale and live in a beach-resort town of south Ca then
aim to purchase at 40% ARV of real and local park sale comps).

Hope this helps. Email me directly if you need further help on the deal.

Best,
John Fedro

REPLY REPORT COMMENT

TRAVIS DEROD on SEPTEMBER 26, 2012 2:52 PM

Hey thanks for posting this John. I was wondering if you have a copy of the
mobile home purchase agreement and mobile home assignment of contract
that I can download and use for a no-money-down deal?

I do have Lonnie Scruggs Deals On Wheels book with agreements. Will I be

able to use the Mobile Home Purchase Agreement that came with that?

Also, can I use the same Assignment of Contract thats used on a regular
home?

Thanks in advance for your advice. I really hope you can help because I really
need to make this happen.

REPLY REPORT COMMENT

JOHN FEDRO on SEPTEMBER 26, 2012 4:29 PM

Hi Travis,

I can provide you with a PSA and assignment of contract if you email me
personally so I can include them in the reply. However if your plans are to find
a mobile home (inside or outside a park) and assign the Purchase and Sales
contract (PSA) to your buyer/investor then you likely already have the forms
you will need.

Keep in mind in most states a mobile home in a park will not need to close at
a title office so you will either have to collect your assignment fee upfront
when assignment is signed OR be present at the point of closing to make sure
you do get paid OR completely trust the buyer to give you the assignment fee
post closing. If the home is attached to private land disregard my last
sentence as this home will close with a HUD-1.

Hope youre working on a great deal!

Talk soon,
John Fedro

REPLY REPORT COMMENT

BRITTNEY on FEBRUARY 13, 2014 2:58 PM

Would love a cop of the agreements you use as well.

Purchase and assignment.

Also is there a dealers license necessary to do this, I think in florida its so

REPLY REPORT COMMENT

TRAVIS DEROD on SEPTEMBER 26, 2012 4:44 PM

Thank you. I just sent an e-mail to one of your e-mails from your website. Let
me know if it came through.

Thanks
Travis

REPLY REPORT COMMENT

KYLE on JANUARY 10, 2013 10:06 PM

Hi, John

So im a college student and im trying to think of a few ways to get a head

start. I was thinking about starting off by buying a trailer in a park for cheap
and renting them out. Im thinking on the terms of guaranteed money every
month ontop of a paycheck which is huge. Then as it goes on keep buying
and buying then sooner or later it all adds up. Is this a good idea or is it just a
waste of money. I live in Vermont and everyone now of days is looking for a
cheap place to live without taking out loans to own.

REPLY REPORT COMMENT

JOHN FEDRO on JANUARY 11, 2013 11:51 AM

Hi Kyle,

Let me first say that it is excellent that you are building cash-flow while still in
school!

With that said it sounds to me like your goal is to build passive income
without using too much money or any credit. If you ask me if mobile home
investing is a waste of time I would certainly disagree as this has been my
income for the last 11 years. It is not a waste of time but it does take effort
and education, and starting from scratch is tough yet very rewarding.

If you have mobile homes near and around you then overtime you can
certainly purchase and resell a number as you described with payments
[most parks dont allow renting]. However there are hurdles and you should
be properly educated. Read up on the subject and go to my blog for more
free info.

Hope this has helped. If you have further questions along your journey I am
here to help.

Talk soon,
John Fedro

REPLY REPORT COMMENT

LIN on AUGUST 7, 2013 8:00 AM

Hi John,

I to am looking to start buying mobile homes and renting them out. I have
never done this and want to know if its smar to do? Also where can I find
your blog? I dont know the ends and outs of this business and want to find
out. Is there also a good lease agreement you could send me way? Any
advice would be great!

REPLY REPORT COMMENT

JOHN FEDRO on AUGUST 7, 2013 9:37 AM

Hi Lin,

Thanks for commenting and reaching out. I am glad to hear about your
excitement with regards to mobile home investments. There are many things
to consider and know before getting started. I am curious if you are
interested in mobile homes in parks or on private land or both?

Yes, I can provide you with a lease agreement, however many parks will not
allow rentals.

Either way there is a lot of free info at my blog at

http://www.mobilehomeinevsting.net

Let me know any more specific questions you may have.

Talk soon,
John Fedro

REPLY REPORT COMMENT

LIN on AUGUST 7, 2013 10:05 AM

Thanks!!! I am interested in renting out mobile homes with land, not in a
park.

REPLY REPORT COMMENT

BILL THOMPSON on SEPTEMBER 30, 2013 8:42 AM

Hi,
I have a newbie question concerning buying mobile homes in a park that has
monthly land rental fees. Say I buy one and it does not sell for several
months. I am I correct in assuming that the land fee will still have to be paid
even though the home is not occupied?
Thanks,
Bill

REPLY REPORT COMMENT

JOHN FEDRO on JANUARY 16, 2014 3:18 PM

Hi Bill,

Thanks for reaching out to me on this issue. I apologize for the delay in my

response as I am just now seeing your question/comment. In the future if I do

not respond in a few hours or day it means I did not see the email or
question. Please email me for quickest reply time as well.

You likely have already discovered your answer however I will answer it
anyway for the benefit of others. Yes, the monthly land fee is still due
whether the home is filled or not. With that said you can negotiate with the
park manager for free or discounted lot rent for the first few months or
anytime the home is vacant depending on the park manager, who you are
purchasing the home from, and other factors. However most of the time this
lot rent will always be due monthly.

On a side note if the home doesnt sell for months than the price or terms are
not right. Homes should sell quickly or the price/terms need to change. Hope
this all makes sense.

Talk soon,
John Fedro

REPLY REPORT COMMENT

CHRIS on OCTOBER 19, 2013 12:49 PM

I live in NJ and I was interested in buying and renting out mobile homes, I am
trying to research info on it but from what I am reading thats prohibited.
Does anyone know if this is true?

REPLY REPORT COMMENT

JOHN FEDRO on JANUARY 16, 2014 3:23 PM

Hi Chris,

I am curious what makes you say that. Can you add the link to what you are
reading to this page or my email? I have successful and active members
investing in the NJ. What aspect of purchasing, reselling, or renting a mobile
home is prohibited? Why would buying, selling, or renting real estate or
mobile homes be prohibited? This makes me chuckle. Is NJ Nazi Germany?

Talk soon,
John Fedro

REPLY REPORT COMMENT

JOHN FEDRO on JANUARY 16, 2014 3:24 PM

Additionally I apologize about the delay. Anytime I dont answer in less than a
day it means I have not been alerted to the comment. You can always email
me directly for fastest reply time.

Talk soon,
John Fedro

REPLY REPORT COMMENT

KIMBERLY on JANUARY 15, 2014 8:10 PM

John,

I am helping a friend build his business in real estate investing and he has
started with four mobile homes. The challege is the park only will let him
have his name on one, it is an owner occupied park. He has been renting out
the four moble homes and I am trying to do his taxes and none of the homes
are in the business name. He has put about $12,000 out of pocket investment
to rehab the properties and I am trying to recoop some of the loss but I just
dont know enough. His company is an S-corp, can you send me in some

direction. I need to send him to your site.

Kimbelry

REPLY REPORT COMMENT

JOHN FEDRO on JANUARY 16, 2014 3:27 PM

Hi Kimberly,

Thank you for reaching out to me on this issue. While I can not give out legal
or business advice I can let you know what I would do and have done in this
same situation. I would advise your friend to purchase and hold every
property in a separate Personal Property Trust. This will keep his name off of
all the Titles while making the park manger happy and keeping him and his Scorp safe.

I am always available for more assistance as I am sure you will have some
followup questions. Happy to help and thanks for recommending my site.

Talk soon,
John Fedro

REPLY REPORT COMMENT

TED on FEBRUARY 1, 2014 1:49 PM

John I have a question to run by you. I recently purchased a small piece of
land (about 1.4 acres) to use to open a business. I have decided not to pursue
that use, however, and recently decided that it would be a great rental site
for about 4 mobile homes, and may provide a useful supplementary income. I
have decided to go with one of theses 3 options: 1) Purchase the mobile
homes, set them up, and rent them out. 2) Purchase the home and set it up,

finance the home, and rent the lots. 3) Puchase and set up homes, and
finance the home and land. Of these options, which do you recommend?

REPLY REPORT COMMENT

JOHN FEDRO on FEBRUARY 3, 2014 3:03 PM

Hi Ted,

Congratulations on creating your own little mobile home park. I regret to hear
that your other business will not go through but hopefully it is for the best.
Simply answering your question I would would say 2 for sure. You get to put
long lasting people in the home, charge a down payment, receive higher
monthly payments than rent, and you will still own the land for years to
come.

This is only my opinion and there may be other factors to consider such as
local rent in your area and if you like maintaining mobile homes, etc.

Hope this helps,

John Fedro

REPLY REPORT COMMENT

JOE on JULY 10, 2014 7:50 PM

John,
Can I invest in mobile home with seller financing in Texas? I listened to you
interview with Bill and it sounds like its a daunting task.
Thank you,
Joe

REPLY REPORT COMMENT

BOBBY MITCHELL on AUGUST 9, 2014 4:33 AM

John,

This week my wife and I made a cash purchase of 4.3 acres in South
Mississippi just a few miles from our home. The plan is to create 8 mobile
home lots, each 1/2 acre in size. We want to attract families and maintain a
nice place for them to live. We are debating on whether to develop and rent
only lots, purchase and place 3bd/2ba homes or a mix of both.

This is raw land and developing each lot will cost about $5000
(utilities/pad/sewer) and the cost of homes if we decide to go that route
would be $10,000-$15,000 each. We plan to develop this property over 5
years and pay cash for everything.

This is a low income area but the profitability on both scenarios is quite well
with lots renting about $200/month and rental rates about $550/month.

Our concern is for insurance and maintenance. Being in South MS it is quite

possible that a hurricane could severely damage any homes we purchase.
What is your recommendation in this scenario? Is it worth the risk to purchase
the homes?