Selling Mobile Homes in Your Park


If you happen to own a mobile home park, buying and selling mobile homes in it can provide as much profit as the rental income you get. If you don't own a park, you might want to consider investing in one once you understand the strategy that follows.

We start with a question: How much is a mobile home worth? Of course that depends on whether the home is newer or older, how large it is, how nice it is, where it is located and so on. Location is one of the biggies, naturally. For example, a mobile on a rented lot that might sell for $8,000 in other areas can get $40,000 in Durango, Colorado. This is a town people like, and which has high rental rates and expensive houses. Add to this the fact that they aren't building any more mobile home parks, and you start to see why people will pay more for an old used mobile than a new one - just because of location. Haul that mobile elsewhere and it would lose 80% or more of its value.

Its something to keep in mind if you are looking to buy a park, but you can't move a park you already own, so let's look at what you can control right where you are. Specifically, let's look at one of the most important elements of value after location: The ease of buying. Make a home easier to buy and you increase the value -- that's the essence of the strategy that follows.

Suppose a young couple wants a nice mobile home and the new ones cost about $30,000 or so, with payments of about $420 per month. Add to that the lot rent of $280 per month, and they are looking at $700 per month for housing. Now let's suppose they don't have the $3,000 needed for the down payment, nor the money needed for moving the home to a park and various other expenses, like the deposit for the rented space. They're also not sure they can afford the $700 monthly costs along with utilities. This is a common scenario.

Still, they want to own something rather than rent, so they look in parks and see nice used mobile homes selling for less than half the price of a new one. But nobody wants to finance older mobiles, or if they do it is at very high interest rates and with big down payments. When they come to your mobile home park though, it is different. You are selling mobile homes they can afford.

There is one they really like. After the previous owner had a job transfer, and couldn't sell his mobile for the $8,000, you offered him $5,000 and he thanked you for resolving his problem - he was still paying lot rent after all, and he wanted to move on. After you paid $100 for someone to clean up the home you priced it at $12,000. You were able to do that because the price isn't just about the mobile itself, as we shall see...

Our young couple loves the home. You won't budge on the price you let them know, but you will take just a $500 down payment. You also require the first month's lot rent of course. They can afford the $780 up front, and they will pay the balance on the home at $160 per month, with interest at 12% annually. In a little over 10 years they will own the home free-and-clear. They buy it.

Look at this from their perspective and it makes immediate sense. Now they have a home that they own for less than renting an apartment of a similar size, and their mobile will have some value once they pay the balance in full. How much value doesn't really matter since they are spending less than rent. In fact, if they are paying $200 less per month than rent they will save $24,000 on housing over ten years. Anything they sell the mobile for will be a bonus. This also may be their only option since they have so little cash in the bank.

Now consider it from your perspective. A profit of almost $7,000 on the mobile is just the start. You also collect 12% interest not just on your $5,000 investment, but on the whole balance owed ($11,500 to start). This is a great return on your investment, to say the least. Have a dozen of them going and you'll have a nice extra income stream.

Opportunities like this arise regularly in a park. Owners need to sell quickly for a variety of reasons. They may want to avoid paying lot rent for months while also paying the expenses in their new house they bought. Job transfers require quick moves. Selling can be a lot of work, and they'll pay a commission if they hire a sales agent. Honestly tell them that you buy mobiles to make a profit and can't pay much, but you can pay cash immediately, and many of these sellers will be happy that you resolved their problem for them.

How Much Can You Make?

You should aim for thousands of dollars of profit on each deal. Between the capital gain and the interest that you make it is realistic to make returns of 20% annually on the money you invest. That rate doubles you money in less than four years.

A while ago I read a true story about one owner of a park who bought and resold the same mobile home in his park about six times over the years. He figures he eventually made $35,000 off an initial investment of $4,000 -- that's an example to motivate you.

Ways to Make More | Related Opportunities | Tips

Since your primary market is buyers who have little cash, there is the risk of non-payment. But as the owner of a mobile home park, you have a good degree of control -- you get to say who stays and who goes. This makes it relatively safe to use this strategy. In the above example you only have $4,600 invested after your $100 clean-up and receiving the $500 down payment from the buyers, so it is likely that even if the new buyers trashed the place and walked away a year later, you could resell at a profit again.

Qualifications / Requirements

This strategy works best if you are the owner of a mobile home park, since that gives you the inside scoop on homes coming up for sale and gives you the control over the situation that makes this kind of investing low-risk.

First Steps

Buy a mobile home park if you don't already own one. If you do own one, start making offers on any mobiles that are for sale, and then start buying and selling those mobile homes.

Resource - A forum about mobile home investing, and some articles on selling mobile homes and related topics.

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Every Way to Make Money | Selling Mobile Homes in Your Park