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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
MORE RESOURCES:
Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Luxury's Latest Battleground: Real Estate | BoF The Business of Fashion Realtor accidentally burns down home news.com.au Who are real estate lobbyists talking to in New York? City & State New York Public records: Coshocton County, Ohio, real estate transfers Coshocton Tribune Brockton-area real estate sales for Dec. 26 to Dec. 29, 2023. Enterprise News The End of the Super Broker Era in Commercial Real Estate Commercial Observer Refined Real Estate: Historic Queen Anne Polson House lists for $6,950,000 seattlerefined.com Real estate shake-up: Possible commission changes ahead 11Alive.com WXIA Real Estate Commissions Are About to Get Much Cheaper. Here's How Zillow, Redfin, and Opendoor Could Be Affected. The Motley Fool On Real Estate: The confusing and contradictory state of post-pandemic retail Crain's New York Business Miami Beach real estate investor under investigation for firing shotgun from waterfront home WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale REAL ESTATE | New signage for Auto Safety Center on S. Main Street, West Bend, Wi washingtoncountyinsider.com A luxury agent on how the NAR settlement will change his business The Washington Post Knoxville School Board to Hold Several Public Hearings Regarding Real Estate Parcels KNIA KRLS Radio Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times The Realtors' Big Defeat The New York Times Realtor group will pay $418M to settle commission lawsuits The Associated Press How new real estate rules may impact home prices in Connecticut Eyewitness News 3 Israeli real estate event: Legal complaints escalate NorthJersey.com Rules that helped set real estate agent commissions are changing. Here's what you need to know KXLY Spokane Will March bring more madness to Craven County's real estate market? New Bern Sun Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know Lufkin Daily News China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know El Paso Inc. Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter Hocking County real estate transfers | News | logandaily.com Logan Daily News What the death of the 6% real estate commission means in D-FW The Dallas Morning News What Seattle-area homebuyers should expect after national settlement The Seattle Times National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Settlement will affect Iowa homebuyers KCCI Des Moines Realtors settlement brings confusion, relief to Southern California’s real estate industry OCRegister Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal Making Sense of New York's Confusing Luxury Home Market The Wall Street Journal A commission settlement may affect housing market 9News.com KUSA End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution Realtor Lawsuit Settlement Will Change the Housing Market Forever Business Insider A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal Yoon to scrap 'reckless' plan to raise declared real estate value The Korea JoongAng Daily Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Bridgemarq Real Estate Services (TSE:BRE) Share Price Passes Above Two Hundred Day Moving Average of $12.93 Defense World Wilmington realtor weighs in on proposed changes to real estate industry following major settlement WECT Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily Revolutionizing Real Estate Lead Generation: Stephen Zochowski's Groundbreaking New Book 24-7 Press Release 4 Ways a Settlement Could Change the Housing Industry The New York Times Colony Ridge violated deceptive trade practices, Texas says The Texas Tribune Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider Real Estate Credit Investments (LON:RECI) Shares Pass Below 200 Day Moving Average of $126.75 Defense World What will the Realtors settlement mean for Arizona homebuyers? The Arizona Republic Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star |
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