Investing in Manufactured Homes | Mobile Home Investment

by Christopher Levarek

“Creativity is seeing what others see and thinking what no one else ever thought.”

- Albert Einstein

When you picture real estate, like most people, you picture a nice big home with granite counters, spotless white cabinets, large windows, vaulted ceilings, a green yard, blue pool and nice white picket fence.

Right?

Or perhaps you picture that flashy real estate agent driving a bright yellow Camaro and wooden white “Sold” signs in the backseat. I mean, real estate is supposed to be all money, glamorous and sexy.

Right?

Ok, take all that and throw it out the window because it holds no value as a real estate investor. You see, most of the best investments I’ve ever made have been into properties where value was created and nobody actually saw what I or my team could see. A lot of these properties were not the flashy and decked out real estate residences of dreams, but diamonds in a very rough casing.

That is what makes good investing, seeing the diamond or angle others can not. It makes for good prices when buying and thus typically makes for good investments. So, in this article, I’m going to discuss manufactured homes and a potential angle for all you investors out there. Follow along if you want to learn how we ourselves are using this strategy and how you can too!

What’s a Manufactured Home?

In the world of real estate mobility, there exist multiple terms worth understanding. There is a mobile home, manufactured home and modular home. All are partially or fully built in factories and transported to a location for residence.

A Modular home is partially constructed in factories but put together on-site. It is also titled as “real property” from the start, more on this later. A Manufactured home is built fully in the factory, transported to the site. Manufactured homes also could be located right next to a traditionally constructed or “stick built” home. They do not need parks.

A manufactured home and mobile home are titled as “personal property” and not “real property” like a normal house or modular home. This is due to the fact that they are typically not tied to the land but leasing the land in most cases.

Why Don’t people invest in a Manufactured Home?

What people picture…(not a manufactured home)

Remember what I said about the diamond in the rough? Interestingly enough, manufactured homes often get overlooked by investors due to their appearance and image associated with mobile homes or mobile home parks.

In addition, financing a manufactured home with a traditional lender is very difficult due to strict requirements. Typically a lender will require the owner to have the manufactured home:

On land that you own
Affixed to a permanent foundation that conforms to HUD Code: building standards set by the Department of Housing and Urban Development
HUD-compliant: It should have a HUD tag (metal plate certification label found outside the home) and data plate (paper label found inside the home)
Titled as real property (real estate)
Built after June 15, 1976
Without axles, wheels, or a towing hitch
A minimum size (for example, 400 square feet)

So now we know the hurdles and why they are not appealing to investors but…

What if you could purchase a manufactured home at a discount, compared to other property, due to it’s lack of appeal and issues yet achieve the same cashflows? Read on!

The Secret of Investing in Manufactured Homes

Like any problem, if you can solve it, you can take advantage of something others can not. This is a common theme in real estate investing. So the problem here is lack of appeal and the financing of manufactured homes. This keeps demand low from investors.

So Step 1 is easy, fix the appeal. Just like any property, paint and flooring will do wonders for making the home shine. Update the roof, add cabinetry and fresh appliances and a manufactured home will look just like any other.

Ok Step 2 is the real secret. Remember all those requirements listed above, well make them easy to meet for the next investor or for you. Here I’ll list them out :

On land that you own - Make sure you have the land in the deed at purchase.

Affixed to a permanent foundation that conforms to HUD Code: building standards set by the Department of Housing and Urban Development - Ensure the foundation is permanent with a contractor
HUD-compliant: It should have a HUD tag (metal plate certification label found outside the home) and data plate (paper label found inside the home) - Make sure you are compliant
Titled as real property (real estate) - Make sure it’s titled as real property with the local county. Completing all these elements in this section will enable it to be if not.
Built after June 15, 1976 - Don’t buy it if not!
Without axles, wheels, or a towing hitch - Have a contractor remove these!
A minimum size (for example, 400 square feet) - Don’t buy it if not!

There you have it! Now you have made it able to be financed for you or another investor you sell to. The most important piece is titling the manufactured home as “real property”.

Once this is done by completing the items above, you raise the value of the property by allowing it to be on the same playing field as stick built homes.

In Final

When everyone is looking left, the most successful investors are looking right. Mobile home parks and manufactured homes are on the right as everyone looks at luxurious apartment complexes and newly built single family homes.

I advise you to look right my friend, as often as possible, as it is always worth a look. Happy Investing!

Oh, and if you want to see a property we are doing this strategy with, check out our opportunities page for property #113.