Mobile Home Investing: Real Estate’s Creepy Uncle

As an active real estate investor investing in mobile homes for the past decade I have come to the realization early on that the one of the single greatest advantages of investing in mobile homes for long-term profit is the ‘Lack’ of affordable bank financing for qualified buyers.

Let’s start from the beginning.  A mobile home is located on land you own or located on land that is rented, typically known as a mobile home park.  Either way a mobile home sits on a piece of land and is lived in by an end-user.  Like middle to lower-end traditional homes there is a huge segment of society that is in desperate need of ‘affordable’ housing.  Mobile home buyers want the same things as traditional house buyers; a clean and safe home in which to raise their families and grow old.

As if it wasn’t hard enough to secure financing before the housing market collapsed, in today’s market mobile home financing is undeniably scarce unless the mobile home you intend to buy is brand new, you have land to give as collateral and/or don’t mind borrowing money at a 12% or higher interest rate.

It is due to this lack of bank financing that is putting a halt to the general public being able to buy mobile homes, and a virtual halt to all current mobile home owners being able to sell their unwanted properties.  Although not as common as bank loans, Mobile home buyers may still purchase mobile homes with all cash because one does not need bank financing if buying with all cash.

Just because mobile home financing has gone dry does not mean that mobile home buyers have gone anywhere, in fact there are even more buyers in the market today compared to five years ago because of the affordability and higher building standards for newer mobile homes.  Families that would not have considered owning a mobile home five years ago are now happily moving their families into nice mobile homes.  Mobile homes today are built to higher and higher standards while still retaining their affordability.  A 3 bedroom, 2 bathroom mobile home can cost only a fraction of the cost of its 3/2 block or frame counterpart.

Just because big banking has put a hold on many mobile home lending programs doesnot mean that these buyers have vanished.  There are millions and millions of eager and qualified mobile home buyers still in the market waiting for a home to be sold with seller held financing.

Here comes the magic!

You become the bank! Listen closely, “You don’t need cash or credit or a big building to compete with banks, you simply need the right education.  the education that teaches you won’t be lending any money, you are simply agreeing to accepting a large down payment and monthly payments (in substitution for all cash) as part of the terms of the sale to sell your mobile home property to an end-user.

Thousands of dollars down payment today and hundreds every month for the next 10, 20, or 30 years sounds like a retirement plan to me!

Now that we are all on the same page you can begin to see why there is such a high demand for mobile home investors.  As real estate investors one of our jobs is to be the middle men and women of real estate.  We hold the knowledge that finds deals, structures terms, and negotiates to then pass onto our buyers.

Know before going in to the mobile home market that the majority of the sales both buying and selling will be structured with owner/seller financing.  This is the perfect formula for purchasing with little to no money at closing and the need to avoid a bank’s financing restrictions.

Let’s get real!

Let’s be honest, the mobile home market has yet to really explode.  If ‘mobile home investing’ was as big of a buzz word as Wholesaling, REO’s, Flipping, Rehabbing, or Short sales we would not be having this discussion; the market would already be saturated with investors.  But it’s not… yet!

Up to this point the mobile home market has been relatively quiet, the same big investors dominating the market and keeping it quite for their continued successes.  It is only now, with the digital age and the greater freedom of education online that the masses are seeing the financial benefits to adding mobile homes to their arsenal of real estate.

I’ll be the first to say that mobile homes are probably not the ‘End all be all” of real estate for most of us.  That is to say that mobile homes may not light your investing fires, “Neither did I when I started.”  Mobile homes may only be your starting point; an inexpensive way to get into the real estate game once and for all.  Or, if you are already actively investing in real estate – stop passing mobile homes by!  Adding 5 to 10 mobile homes to your current portfolio can help supplement your income as you wholesale, flip, or short-sale other properties to make money. Turning a blind eye to the constant and passive income of mobile home now will most likely cost you a small fortune in lost opportunities (cash-flow) down the line.

Happy Investing,

-          John Fedro

Creator of the Mobile Home Cash Flow System