Making Money with Mobile Homes

Considering the economy and a reluctance of banks to lend money to investors, I thought an affordable way to make money was in order.  I will present to you here a low investment required way(s) to make money in todays market.  Before picture on the left.

Over the last few decades I have bought and sold a few mobile homes, further I have met several men who have and do make tens of thousands of dollars from mobile homes. One man I know in San Antonio, Texas has 22 rental units (used mobile homes), his rental income is in excess of $12,000 per month. Another Man in Seqine, Texas owns a mobile park and he replaced the lot renters with homes he purchased used when ever anyone moved out. He was getting $225.00 to $295.00 a month to rent the lots, with the used mobile homes he gets an average of $650.00 a month rent. The used mobile homes cost from $5,000 to $10,000 each. Giving him a payback on the additional investment of one to two years.

Renting is not the only way to make money with used mobile homes. You can also buy, fix up and sell them. You can sell them on a rent to own. You can buy them for cash, then sell them on an owner carry note and make 20% plus annual returns on your money, or you could do a combination of all of these.

Let us look at each of these and run some numbers. For a reality check I will do up dates on this article of one actual deal now in progress, more later on it.

Renting mobile homes can be very profitable and a low cost way of getting into the rental housing business. Let us suppose you buy a used two bedroom mobile for $8,000 and spend $2,000 sprucing it up for a total investment of $10,000. You rent this unit for $650.00 a month. Your lot rent should be about $250 to $300 a month leaving you with $350 a month cash flow. After taxes your cash flow should be about $3,500 a year. That is a pay back of 28 months, in less then three years you have all your money back. Get ten of these and you have a real nice extra income. I prefer the single wide units because double wides units cost more to buy and to set up, yet the rent is not that much higher.

Buying and selling mobile homes can be a nice profitable side line and-or a way to pay for rentals. Using the same example you buy a single wide house for $8,000. You spend $3,000 to $5,000 fixing it up to sell, that will mean just slightly nicer upgrades and fixtures then for a rental. You want the customer to say “wow” when they walk in the door. New decorator paint, new carpet, new bath room fixtures, new faucets and lighting etc. And you stage the home like a model home. You list the unit for sale at at $20,000. Your classified ad might look like this.

 

For sale newly remodeled mobile home,

14' x 56' 2/1 like new, easy qualifying,

$25,000 owner financed $2,000 dn.
$667 mo. includes lot rent.

 

You sell the home somewhere between $22,000 and $25,000 with $2,000 down. You finance the buyer at 14% interest. If you carry the note for $20,000 at 14% for 6 years their payment is $412.00 a month. If you carry 18,000 at 14% for 6 years their payment is $370.90 per moth. They will pay because they can't live anywhere else cheaper then that. You then sell the note, or use it to borrow at the bank for your next deal. There are plenty of people who will buy 14% notes.

Do both. You could sell a few and use those profits to finance your rental fleet until you have enough rental units to provide the monthly cash flow you think is sufficient for your needs.

I purchased a single wide mobile home on Sept 22. 2009 The lady was selling the home to clear her mothers estate. She was asking $10,000 and getting offers under $6,000 So I offered her $6,000 cash or $8,000 with $1,000 down and $1,000 per month for seven months at zero interest. She jumped on that deal. I will spend $3,000 to $4,000 remodeling this trailer into a “for sale” condition house. I am looking for the “Wow” factor to enable me to get the highest price possible from my investment. The mobile home park ($300 lot rent) does not allow rentals, so a sale makes sense. The house is on a corner lot with a huge Oak tree in the front yard so it will show well. The outside only needs new light fixtures and door locks and a new entry porch. The inside will get new carpet, decorator paint, new linoleum, new fixtures, mini blinds, all new trim, curtains, a new shower, vanity and bathroom mirror. I will keep you undated on the progress.

The Money: I took $2,500 out of my stock investment account to get this deal going. That is why I offered to pay more if the seller finaced the mobile home. I did not want to sell any more stock then need be in a rising market. I have all ready made the $2,500 back on stock price increases.

Update: 8-14-2009 We got lucky and the city had a trash pick up last week so no demo debris hauling cost. The shower pan was $318. light fixtures $328.00 and I have not got my Lowe's card bill yet. Labor has not given me a bill yet either, but at $10 per hour it is adding up. My budget is $1,500 labor and $2,500 materials.

 

 Update: 9-25-2009 I am over budget a lot. But the trailer house is looking really good. I just got a little carried away, I knew better and did it anyway. There is a problem when you have the money to do what you want, it is better to have the constraints of a smaller bank account, well, not really, more discipline would help. In any case, the new price will have to be $24,000 The house will be sold for $25,000 with 10% down and I will carry the note at 14% APR. Terms will be 5 to 10 years depending on the buyers budgit.

Update: 10-21-2009  

Here are the after pictures, everything is done except outside window shutters and a shower door. I have two potential buyers lined up. I need to get this sold within thirty days because it is now costing me money to hold it. Total cost to date is $18,000

Living room: new paint, trim, carpet, ceiling fan, switch and plug covers and smoke detector.

Dinette area: New paint, trim and ceiling light. Those boxes contain exteror window shutters leaning aginest the wall.

Kitchen: New paint, touch up cabinet stain, new flooring, new lights, stove escutcheons as well as a good cleaning.

Bedrooms: Both bedrooms got new carpet, paint, trim and light fixture.

Bathroom and laundry area: New flloring, new shower pan, new shower surround, new plumbing and shower head, new comode, new vanity and mirror, new towel cabinet over comode, new light, new trim, new smoke detector and repair water heater.

Other: New exterior light fixtures, trim trees, add to and repair fence, repaint rear stoop, rebuilt front landing, trim landscaping .

After exterior view, Shutters were added.

Update 1-29-2010: I sold the house today for $25,000

 The numbers:

The cost to buy the trailer, cost to remodel it and pay the lot rent during the holding period was $18,900. I financing the buyer with $2,000 down at 14% APR interest for  ten years. 
Loan Amount: 
Amount Financed $23,000.00

Monthly Principal & Interest $357.1 1
Total Interest Paid over ten years$19,853.54
Total of 120 Payments $42,853.54
Pay-off Date Feb, 2020
Interest rate 14%
The buyers lot rent is $300.00 a month

How hard was it to sell? Sold the house in ten days, off a classified ad ran in the Thrifty Nickle clasifieds. Sold it to the second person looking at the unit. A single mother with two children. It was easy to sell because I am financing it, and the monthly payments can be the same as renting an apartment. The buyer gets a like new house that they will own for the same payment as rent. That dear invester, is an easy sale.

What if they don't pay? Remember there is nowhere they can go that is cheaper. So check thier credit, thier job history, and if they do not pay reposses, touch up and resale.