A lot of people stay away from mobile homes because they don’t know much about them, tend to look down on them because they are often in low end communities and because they aren’t really ‘real estate.”
But they can be very profitable – here is a quick primer on how to make a pile of money with mobile home deals.
You can watch it in this video.
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Read Transcript for “Will Your Investing Techniques Work With Mobile Homes?”
“Can you use the “For Rent Method” with mobile homes? Thanks.” – Ron Wilson, Apple Valley, California
Joe: Yes, you can. You have to remember that mobile homes are not real estate if they’re on a rented lot. If they’re in a trailer park, that means that that lot is rented, and 9 times out of 10, that trailer park does not allow tenants – let’s say you’re using the Automarketer and you’re sending out an email blast or a voice blast or a text blast and you get a response saying, ‘Yes, but I’m in a trailer park, it’s a mobile home. I’m still interested in selling it and I’d work with you on terms,’ then that’s great – you can set up a contract to purchase that property where you make monthly payments.
Joe: You have to look at market rent minus the cost of the monthly payment for the lot and then whatever is left is what you can pay for the monthly payment for that mobile home. You have to set up the contract so that the payment doesn’t exceed that and that means you have to set the interest rate and the term of the note in such a way that it covers that, so you have to look at what the seller owes on the property and what their payment is that they’re making on it and make sure that those numbers work and as long as you’re at market rent or below on that trailer, including the trailer park fee, then you’re going to be okay and it’s not going to be a problem.
Joe: Also, remember, it’s not real estate, so you’re not transferring a real estate deed, you’re transferring a title. It’s similar to selling a car. There’s a title on a car just like there’s a title on a mobile home and you can transfer that title and sell it on a contract for a certain amount of money over time at a certain interest rate that pays it off.
Joe: That’s how you would do something like this, and then you make your money by turning around and saying, ‘Okay, this is the property that we’ve got and it’s going to require _x_ amount of down payment. I’m going to charge $3,000 down payment, then you’re going to have to make $300 a month payment on this trailer over the next ten years, and the trailer park fee is going to be $600 a month so you have to cover that as well.’
Joe: So, that’s how it would work with a mobile home. Some of my students have done very, very well with mobile homes because a lot of times, they can go in there and they can actually buy the mobile home – they’ll buy it for $1,500 and then turn around and sell it for $10,000 with $1,500 or $2,000 down, so they’ll have it paid for, and then they’ll have an asset that they’ll make money on for the next ten or fifteen years as people pay them for that property.
Joe: And, the nice part about this is that since they’re buying it on contract, they’re not landlords anymore – they don’t have to worry about the condition of that property – it’s all on the shoulders of the person who is buying it from them. That’s the nice thing about doing land contracts or doing contracts on mobile homes – you don’t have to worry about the condition as much. It’ll affect the amount that you get, i.e. how much money you get monthly, how much you sell it for and maybe sometimes how quickly you sell it. But sometimes it’s easier to sell a property that’s a fixer upper because there’s a certain perception that’s more attractive than a regular property. Alright, I hope that answers the question. Thanks.