Mobile homes

[Notorious BNG]

I have started looking into adding real estate into our portfolio as all the discussions I have read have intrigued me. I know I am not one to personally own and manage property, so I have started by looking into syndicates. I recently joined Realty Mogul and Realty Shares just to see what they have to offer and familiarize myself with the property documents.

Does anyone have good or bad experience with mobile homes? Interestingly, there was a podcast by bigger pockets I partially listened to today about mobile homes. Realty Mogul also has a couple mobile home funds available (not exactly the same as owning a single park as per the podcast).

[Hank]

Margins can be great if you own the whole park.  Right up there with storage units and better than car washes in many cases.

My wife and her sister did okay buying a double-wide in a college town.  Mind you, it was on a foundation and they bought the lot in a neighborhood, not a trailer park.  Still, when dorm rooms cost $10-11K per year and the double-wide costs $40K outright, the math pencils out pretty favorably.  Add in rent from roommates and multiple offspring with seven years of dorm lodging avoided so far (and counting!) and the numbers only look better.

[hightower]

Notorious BNG wrote:

I have started looking into adding real estate into our portfolio as all the discussions I have read have intrigued me. I know I am not one to personally own and manage property, so I have started by looking into syndicates. I recently joined Realty Mogul and Realty Shares just to see what they have to offer and familiarize myself with the property documents.

Does anyone have good or bad experience with mobile homes? Interestingly, there was a podcast by bigger pockets I partially listened to today about mobile homes. Realty Mogul also has a couple mobile home funds available (not exactly the same as owning a single park as per the podcast).

Click to expand...

Vanguards REIT index fund has a large holding of the biggest mobile home company in the US.  So if you invest in a REIT fund, you're investing in the mobile home game as well.  A lot less to deal with than researching individual properties and all the work that comes with owning them, collecting rent, etc.

[adventure]

Paging @MobileHomeGurl...

[Notorious BNG]

For sure. I see this point brought up a lot when real estate is discussed.
I don’t speak from any experience, but I think I’m leaning towards being one of those people that don’t believe that a public REIT is the same as direct ownership or even investment through a syndicate.

[AR]

If you're interested in this and haven't read Deals on Wheels by Lonnie Scruggs, you definitely need to.

[mobilehomegurl]

Thanks for thinking of me @adventure!

Regarding your questions, I've experienced both the good and the bad when it comes to mobile home investing. Like any business, it has its ups and downs. Those who tell you otherwise either haven't been through a full cycle or aren't telling you the whole story.

It's been discussed on here before. Real estate investing is pretty involved if you're thinking of getting in at the ground level. For most docs and professionals, it takes a lot of time which you may or may not have.

About the parks, a lot are being bought up and/or optioned by investors at this point. Many have the intention to flip to other investors (sometimes with less experience). I've written about this topic a lot. People are buying into the hype.

Like any business, it needs to be managed properly to succeed. Most I see where these investors take over involve paying managers peanuts (resulting in high turnovers) and sometimes cutting corners when it comes to putting money back in the park. Usually, they raise the lot rent which makes it look better on paper (if their intention is to flip or refinance). So it could look good on paper but when you get into the management of the park it could be a different story. I've seen this time and time again...

The ones that are managed better usually don't have any issues. These are ones that are sold if Mom and Pop want to retire. Though, in many cases these are private sales to family members or people they know. I missed one awhile back from a couple who had sold to a family they got to know really well. Though, it took many years to develop the relationship before the deal went through.

Hope this helps. Good luck!

 

 

 

[WealthyDoc]

Mobile homes tend to depreciate rather than appreciate like other houses.  You can compensate for this depending on the property, location, debt structure, etc.  It is a profitable industry for sure.  Some investors shun it because it seems "beneath" them which opens up more opportunity for those of us who want to invest.  The mobile home of today isn't the trailer of the 1970's.  Some of the locations have solid-looking houses and tons of amenities.  Like any investment, most of the risk comes from not understanding the risks.  If you do your homework, you may find the niche profitable.  For more: Mobile Home Passive Income.

[jfoxcpacfp]

My son and DIL have had fantastic results with a mobile home park they purchased a couple of years ago. This was my first experience advising on one and, when I saw the reports to help them decide, the numbers seemed too good to be true. The key for them (other than the basics like ROI) has been keeping the manager on and keeping her happy. That is a biggie - otherwise, expect to spend a lot of your own time getting repairs done, replacing appliances, collecting rent, filling vacancies, etc. Collect rent on a weekly basis and look for a history of long-term occupancy.

As WealthyDoc stated, these are not the trailers of the 1970s.

[Zaphod]

There are some amazing mobile home parks out here. There are a couple in Malibu/Santa Barbara with amazing locations. The Malibu one has some of the nicer appointments inside you've seen, some with amazing amazing views, but they go for 1-2M.