Mobile homes are a particular kind of residence built in a factory and hauled to the chosen destination. It comes with facilities that are in any home, such as a kitchen, toilet, bedroom, etc. Similar to a single or multi-family house, mobile homes give people a place to live.
According to the Manufactured Housing Institute, 22 million Americans live in mobile homes, and 62 percent of the residents anticipate staying for more than 10 years. 90 percent are satisfied with their mobile home.
Hence, buying mobile homes to rent out can be a good investment. It not only needs a lower financial entry point but also gives quicker returns than other investments. Buying and renting out mobile homes gives you a constant income stream. It can also diversify your rental portfolio.
Mobile homes indeed create a significant return on investment (ROI), but as an investor, you need to start with caution. You need to fully understand what you are going into before buying mobile homes to rent out.
Hence, everything you need to know about buying mobile homes to rent out will be discussed here. Ranging from steps in buying to merits and demerits, as well as things to consider when buying a mobile home.
Things To Consider Before Buying Mobile Homes To Rent Out
These things will help you in your decision-making.
1. Be Ready To Handle Tenant Problem
This is one of the things to consider or keep in mind while buying a mobile home to rent out. The tenants might disappear from the mobile homes. Not only that but leave the home in a horrible condition. Hence, have this in mind and vet your prospective tenants.
2. Location Of The Rental Property
Where is the location of the mobile home? This is one of the most important things to consider when buying mobile homes to rent out. Check out if the property the mobile home will sit on is attractive.
Check out the street names and signs. Know if the location is where prospective clients will be interested. Remember, the amount you will receive as rent is directly proportional to the location. If the mobile home is in a home park, look into its rules and regulations and know if you are allowed to rent it out. Additionally, if the renter will follow the regulations.
3. Property Taxes
Keep in mind that owning a property is equivalent to paying property taxes. Research the property taxes for the location of your property. It may be a shock to your finances or painful if you are not prepared to deal with the expenses. If it’s more than required, the cost of rent may not cover it, which may make the venture not worth your time.
4. Compute The ROI (Return On Investment)
This is one of the things to consider before buying a mobile home to rent out. Compute the return on investment first. This will enable you to know if you are ready to commit or if it is worth your time. A good place to calculate or get a picture of what to expect from your investment is https://biggerpockets.com. Don’t forget, it’s very important.
5. Basic Conflicts Management Skills
Consider how you will handle conflicting situations. Learn and master the skill. Most times, it is inevitable, because even the simplest human finds themselves in landlord-tenant conflicts. You can plan on hiring a manager to deal directly with your tenants if you can’t. Remember that part of the skill is to listen carefully and show respect and care.
Procedures In Buying A Mobile Home To Rent Out
After considering the things above and knowing it is something you want to do, you need to know the procedures for buying it.
There are numerous steps from purchasing a mobile home to renting it out.
1. Define Your Budget
This is the first step in purchasing a mobile home. Define your budget, the purchase price of the mobile home, the land cost, and the costs of setting up. Additionally, there are insurance and maintenance expenses. Define what you want.
2. Select Between New And Used Mobile Homes
This is where you decide whether you want to buy new or used mobile homes. New homes are more expensive but have more guarantees and recent features. Used homes are cheaper but require more maintenance. Decide and select one immediately.
3. Choose The Right Size And Layout
Remember the amount of space you need and the layout that best suits your needs. Mobile homes have numerous sizes and floor plans, like single-wide, double-wide and triple-wide models. Choose the right one.
4. Research About Manufacturers And Dealers
It is now time to look for and research manufacturers and dealers in mobile homes. Look for those that have a reputation for quality. Additionally, those that have good reputations for customer service.
5. Visit Dealerships And Take Tours
This is the fifth step in buying mobile homes to rent out. Visit the dealers to look around the homes. This gives you a good insight into the size, layout, and quality of construction of the mobile home.
6. Secure Financing
This is the sixth step. This can be challenging if you are not paying in cash for mobile homes. Starting early is vital, as you will need different documents to keep in trustworthy, secure storage.
7. Finalize The Purchase
If you have selected a home and secured financing, this is the next step. This step encompasses organizing for the home to be delivered and setting up if it is a new mobile home. Additionally, signing sales agreements and completing other necessary documents.
8. Get A Title For The Mobile Home
After finalizing your purchase of a mobile home, if you want to rent it out, this is the next step to take. Get the title for the mobile home. For the title, you need a few things, like the VIN (vehicle identification number), the brand, the year, and the HUD (housing and urban development) plate of the mobile home. Ensure you check with your local DMV (Department of Motor Vehicle) for the guidelines for your area.
9. Clean Up Your Mobile Home
This is another stage where you can clean up your home in case you didn’t do it during the final purchase stage. Clean it both inside and outside thoroughly. Alternatively, you can hire a professional cleaning service for a thorough cleaning.
10. Advertise Your Mobile Home
Let people know that you are renting out your mobile home. You can advertise it both online and in local newspapers. You can also advertise through Craigslist and other options.
11. Price Your Rental Right
This is the next step to take. Do this by researching how much, similar mobile homes go for. Be confident to include mobile home park rent if you are renting the lot.
12. Draw Up A Rental Application
Type and print a rental application. Download a template online if you don’t know how to do it. This is where you ask about the future renter’s place of employment, income, renting history, and the number of occupants.
Get a security deposit and spell out rental due dates and late penalties. Get all the necessary information from the person before renting it out. After this is completed, you can rent your mobile home out. If you find a good person, you will enjoy a good return.
Advantages Of Buying Mobile Homes To Rent Out
There are so many benefits of buying and renting out a mobile home.
1. Affordability
This is one of the advantages of buying a mobile home to rent out. It doesn’t cost much to purchase a mobile home compared to traditional homes. This minor cost makes it easily accessible and profitable.
2. Low Maintenance And Repair Cost
Mobile homes are cost-effective and less demanding in terms of repairs and maintenance compared to traditional homes. This may be attributed to its smaller size and simpler design. Additionally, this can also be due to the price of materials and labor, as they are mostly less costly compared to traditional homes.
3. Locale Flexibility
Mobile homes are movable. If there is a dip in demand for your property, you can easily move it to a more lucrative location. This is one of the advantages of buying and renting a mobile home.
4. Increased Demand
The increase in housing prices has made people begin to look for other affordable living alternatives. Hence, there is a high demand for mobile home rentals. This high demand means that, as the owner, you get a consistent rental income stream and lower vacancy rates.
5. Easy To Add More Mobile Homes
If you own a spacious lot, it is very easy to add more mobile homes to increase your income. It is easy to purchase and set up quickly compared to traditional homes, which take time and money to build. This is one of the advantages of buying a mobile home to rent out.
Disadvantages Of Buying A Mobile Home To Rent Out
1. Depreciation
One of the disadvantages of investing in mobile homes is that they depreciate over time. Compared to traditional homes, which appreciate, a mobile home depreciates as it gets older. This can be attributed to the wear and tear that results from the constant transportation of mobile homes as well as weather conditions. Therefore, as this mobile home decreases in value, your ROI will be affected if you end up renting it out.
2. Problems In Acquiring Tenants
This is one of the disadvantages of buying mobile homes to rent out. There is usually difficulty in getting tenants to rent it out to; this is due to some factors. One of the factors is the rules and regulations of the park.
If your mobile home is located in a park with tenants, adhering to those rules might act as a setback. These rules may include restrictions on external changes to the home, regulations on pets and noise, and the sizes of vehicles to be parked in the lot. Hence, the rules and regulations will limit the number of potential tenants willing to come.
Final Words
Buying a mobile home to rent out is a good investment that yields a great return on investment. It is very vital to look at certain things that have been listed in this article before you take any steps. Though some advantages come with it, like location flexibility and low maintenance costs, it also has some disadvantages. Conclusively, buying homes to rent out can be a means to increase your income. You can try it out.
