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A buddy of mine pitched me the idea of buying a new manufactured home to put on some vacant land that I own, and rent out.
He's in real estate, so he would get a small commission off me (which I don't mind), and I own the land, so there wouldn't be any lot fees.
I have always been hesitant of manufactured homes, because I was under the impression they depreciated like a car does. But, he showed me some data that supported the opposite.
Any experiences in this? I like the idea of it being new, so there won't be any headaches, at least initially. And I know it could cash flow well. But will it appreciate in value?
This is in North Central Florida, if that makes any difference.
They do depreciate like cars. You can see that if you look at NADA's manufactured home value guides.
However, that changes when you permanently install a manufactured home on your own land with a foundation and hooked up to appropriate utilities and add an attached garage.
You have to register it with the county as being affixed to the land so it becomes real estate, not personal property.
Then the property as a whole can appreciate in value though it will still have a bit of a stigma as a manufactured home but the cost will be much lower that building a home on the property.
Compare the cost to buying an existing home to rent.
But
The first step is to determine what the rental market is for homes.
What happens if the tenant does not pay the rent?
I realize you can make money in real estate but I don't think it would be my type of investment. I did spend about 5 years in the industry with a small company that rented residential and business properties and had its own employees for maintenance, etc. That was ok as we had skilled employees to handle the problems.
No matter what you call it - it is a trailer. You need utilities and road access. How do you plan to insure it if at all? Talk you your banker and let him explain depreciation on it.
New does not mean everything works, nothing breaks and you have a clean and honest renter. Not to mention weather.
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Build a barndominium (shop with Apartment & RV Cover and hookups),
In central FL. .... Build it out of concrete, and pour a concrete roof (just like a commercial building)
This takes a month to build and costs < 1/2 the price of a new Mobile Home.
Leave a spot for the next person to build their dream house.
Consider all the costs of building on bare land. (Water well, septic, power, driveway, permits, impact fees...)
I usually buy view lots with abandoned mobile homes or trashed houses (legally permitted). That will save you $100,000 up front costs, and 6 months of waiting+ permits.
Then I scrap the trashed house, while playing for a weekend, on my dozer or excavator.... and build a barndominium. The I rent it out, or rent out the RV spot if I want a caretaker.
I have done similar, and bought used or repo mobile homes to place on the property (very, very cheap). I have owned 6+ mobile homes on view acreage, but not in hurricane or tornado or high wind regions.
Mobile homes in ROCs (resident owned communities) usually appreciate in value. Often... A lot!
I was in a few of those today. Excellent home choice for retirees. (But not in high wind areas).
There are a few other building methods that survive strong storms.
New mobile homes are not cheap. They do not usually pencil out as LT rentals. I require $1000/ month rents for every $100,000 of costs.
Some MH are very nice. I only place them on inclined property where I am able to grade them into a hillside, so they have ground level entry from carport or garage (flat for wheelchair Access). No ramp or steps required.
Last edited by StealthRabbit; 11-30-2023 at 04:40 PM..
Get cost estimates on getting the home setup on the lot. Check with the county as far as the codes, regulations, restrictions, requirements.......... DO NOT listen to anyone other than someone with the county, and most definitely not a realtor! With something new, factory or site built, you will have things that are wrong, most likely fixed with the warranty but still somewhat of a hassle. Also, do NOT count on the monthly rent coming in to make a payment or for anything else. Realize that if the renter does not pay, and refuses to move, you'll be waiting for a court date while they live in the house for free, so you'll want to check on that type of thing happening also. Then, expect when a renter moves out to put some money into repairs and cleaning before the property can be rented again.
We rented a house long ago, and would never, ever consider doing it again, and people have not become more compliant or clean over the last couple of decades. You probably have no idea how some people live!
Be sure to check on the cost of insurance.
The home will be a rental property so insurance will probably be higher than your residence insurance.
You need liability insurance to cover you if you are sued.
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