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When you hear the words "mobile home", what do you immediately think?
Hillbillies with rebel flags in their windows? The show COPS? Sure, that's the
stereotype, but the truth is that a huge number of Americans- about 20 million
of them- live in mobile homes. And the demographic make-up of this group is not
much different from normal residential subdivisions and apartment complexes.
Another little-known fact about mobile homes is that you can make excellent
returns by investing in them- with amounts as low as $5,000 to $10,000. Returns
in the neighborhood of a steady 10% to 20% per year. Compare that to your recent
successes in the stock market and the rate on CDs at your neighborhood bank and
you'll see that those type of year-over-year returns are really pretty
extraordinary.
So how do you invest in mobile homes?
Get an
understanding of the product.
Mobile homes are not constructed like the
type of traditional "stick-built" housing that you are more familiar with. For
example, a mobile home has no load-bearing interior walls. A mobile home is like
a shoebox- only the exterior walls are load bearing. In addition, the utilities
normally follow certain "troughs" that allow for easy access. You can find some
cut-away drawings of mobile homes on the internet and you will be shocked at
their simplicity. This simplicity, however, pays big dividends when it comes to
repairs and remodeling. Unlike traditional home construction, a mobile home
allows for an amateur to do a perfectly fine job.
You should go to a
local mobile home dealer and walk through some mobile homes- including some
older trade-ins that are probably at the back of the lot- to get a feel for what
the product is.
Get an understanding of what the customers' needs are.
Mobile homes are the least expensive form of detached housing in the U.S. As
a result, they appeal to lower-income Americans- often folks who earn minimum
wage. This group is not nearly as demanding as buyers with higher earnings who
are looking at much more expensive housing options. That's not to say that they
have no standards, because they do. But their standards are much lower and much
easier to satisfy. Many of the cosmetic issues that you would find unacceptable
in a $100,000 house are perfectly fine in a $10,000 mobile home. These include
stains on flooring, wall taping and bedding, quality of paint job, condition of
appliances, etc. These reduced expectations make the investor's life much
easier, as it takes less to make a mobile home ready for sale, and it is much
easier to meet the demands of the customer.
You should look at some of
the mobile homes for sale in the newspaper to see what is offered in your
market, as well as the price points. You will be amazed at how "rough" many of
the offerings are, and how low the price points are.
Team up with a
mobile home park owner.
Many mobile home park owners would love to work
with investors to buy and sell homes in their parks. These types of
relationships are essential, as a successful investor will need certain
concessions from the park owner to ensure that they get a good return on their
investment. These concessions include free lot rent at any time that the home is
vacant, help on marketing the home, and sometimes financial bonuses for each
home sold.
Start small and add-on based on performance.
The proof
is in the pudding. Start off with one investment in a mobile home- maybe $10,000
to buy one home. From this one investment, you will learn a tremendous amount
about the process, from choosing a decent home to marketing and real-life profit
and loss. A normal deal will have a return on your money of 10% to 20% per year.
There are certain instances when you will have a much higher return- 50% or
more- but these are rare and should not be taken as the norm. Anything less than
10% is unacceptable and you should analyze what you did wrong and learn from it.
When you "partner" with a mobile home park owner, they will take a vested
interest in your success and your odds of making a higher return are much
greater.
Conclusion.
There are few options today that offer 10%
and greater real returns on your investment dollar. One of the safest is mobile
home investing. It's a simple product that appeals to a simple customer. It is
not subject to changes of technology that render it useless, or to changes in
taste that make it no longer attractive. It has been around, undisturbed, for
over 60 years.
Jeff Foxworthy makes very funny trailer park jokes. COPS
has a heyday filming scenes of intoxicated people at some of the worst mobile
home parks in the U.S. But you have to understand that these are promotional
stereotypes- and not the norm. The normal mobile home park resident is just a
regular person making their way through life- and offering you a very handsome
return on investment.
If a steady 10% to 20% return sounds appealing, you
should definitely check mobile home investing out. You can get a complete list
of parks that are proactively seeking home investors at the website
www.mobilehomer.com.
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