Investing in mobile homes is quickly becoming a highly lucrative practice within the housing industry. There are more than nine million mobile homes in use or currently being built. This is in line with a growing trend in across the country for more affordable housing opportunities (the “tiny house” movement is just one example of the popularity of living smaller). As real estate investors become more aware of the trend, many are looking to get in on the action. Why? What are the benefits to this real estate investment niche, and what do you need to know if you’re interested in investing in these exceptional opportunities?
1. Firstly, one thing needs to made clear – there is very low turnover in the mobile home market. Most mobile homes are in the same location as they were upon initial delivery. In this way, mobile home investment is not actually “mobile” as many think. These are homes that are stationary in the same way as traditional housing.
2. Decreased depreciation time. Typical apartment investments allow investors to depreciate the investment over 27.5 years. Mobile homes, in contrast, have depreciable expenses such as roads, and utility lines. These are land improvements that can be depreciated over 15 years, thus allowing investors to benefit from depreciation in the earlier years of the investment.
3. You can buy a used mobile home for anywhere from $1,500 to $5,000. Even if you buy a “fixer-upper”, this is still much less than a down payment on a traditional home. And, you can pay cash.
4.If you need to fix up the property, you can live in the mobile home while you do the repairs and make no payments other than the insurance. One great thing about mobile homes? Typically, they have no real estate tax.
5. Mobile homes can be repaired for much less than it costs to repair a traditional home. “Tricking out” the mobile home can cost as little as $2500. There are some mobile homes on the market with dedicated fitness rooms, porches, state of the art windows, and even Jacuzzis! Even if you went all out for repairs, your total amount spent on everything, including the initial down payment could stay within the range of only $10,000.
6. To build equity and increase your capital for your next mobile home purchase, you can live in the mobile home for two years, saving the money you would normally spend on interests principal and taxes, and use that money to invest in another property. You can then rent the original mobile home for around $350 per month. With a tenant in place, your mobile home could generate more than a 35% ROI per year! You would use this cash to fix up another mobile home, repeating the process until you are generating a sizable income from your mobile home investments. With ten mobile homes, that would be around $42,000 per year in cash flow.
7. Mobile home investing has close connections to land development. RV parks and mobile homes are great choices for better use of land that have much less expense than typical development projects.
8. The revenue that you receive from the mobile home can be used as a tax refund.
If you are looking to break into the world of property investment, investing in mobile homes is a highly cost-effective and manageable way in which to do so. Mobile homes are much more than “trashy trailers”. They make up some of the best opportunities within the real estate market.
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