Manufactured homes may be the best-kept investment secret in real estate. While many investors struggle to raise funds and pay taxes for a single high-end property, manufactured home investors can make easy money and gain quick equity on a collection of homes. It’s also easier to plan ahead with manufactured homes since they’re less affected by changes in the economy than other real estate markets.
Investing in manufactured homes is relatively easy if you’ve got cash flow. The first step is overcoming any negative assumptions you may have about manufactured housing, whether you view it as poorly built, or simply too generic to warrant a long-term purchase. The fact is there is a big market for these homes, with buyers and renters waiting to enjoy the affordable, flexible lifestyle they afford. Manufactured and mobile homes also look a lot different than they used to – many have features like spacious patios and sun rooms areas that add style to daily living.
Many people also assume manufactured homes decrease in value over time, but this generally isn’t the case. A manufactured home may double in value over a decade like any other piece of real estate, especially if it comes with property. This brings us to another advantage: investors can maintain a valuable manufactured home property without the high costs and mortgages of a regular home. These homes can also be moved offsite or disassembled at a fraction of the cost of a regular house.
There are a variety of investment scenarios that can generate a high return in the manufactured home market. The easiest and fastest is to simply buy stock in a publicly traded manufactured housing company, or get involved in a real estate investment trust that specializes in manufactured homes. Another profitable option is to buy a manufactured home and rent it out. You won’t be able to charge as much to rent your mobile home as you would a regular house of the same size, but it won’t be that much less. For example, a $50K mobile home may rent for $600 a month while a $200K regular home rents at about $750 – you’ll be making a comparable return on investment for much less money up front, and smaller monthly mortgage payments. An obvious third investment scenario might be to buy a mobile home, live in it until the mortgage is paid off, and then sell it – in this scenario you’ll spend much less money on repairs and upgrades before the sale than you would with a regular home.
Another pleasant surprise of mobile home investing is how quickly the houses can be paid off. Smaller loans mean smaller interest charges, and faster equity in the home. That also means you can move on to your next real estate investment faster.
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