Did you know that approximately 5.6% of Americans live in poverty? population—17.7 million people—presently live in mobile homes?
The market for commercial real estate has taken notice of the strong demand.
The case for investing in a mobile home park is compelling given their low maintenance requirements, high returns, and overall affordability.
But first, let’s take a closer look at why and how to invest in mobile home parks.
In most cases, the owner of a mobile home park merely rents out small plots of land to other people. Investors have the option to buy the entire mobile home park and rent out each pad to locals who either rent or own mobile homes.
For Americans on low incomes, mobile home parks offer affordable housing., and with that, also provide stability to owners in the case of a declining or depressed economy.
Table of Contents
Five Ways To Find A Mobile Home Park To Buy
Online
In terms of finding properties, the internet has brought about a revolution. Parks with mobile homes are no exception. Online, www.MobileHomeParkStore.com is the most popular source for mobile home parks. There are always between 1,000 and 2,000 mobile home parks for sale on this website. The second-placed website is www.LoopNet.com. Although it dominates commercial real estate as a whole, Mobilehomeparkstore.com is more renowned in that particular industry. Various other websites also offer discounts. Both www.Ebay.com and www.Auction.com frequently host REO auctions for mobile home parks. It is already known that the park is for sale and what the asking price is thanks to online listings, which is fantastic.
Brokers
Real estate brokers with experience in mobile home parks come next. These are brokers who only sell mobile home parks, and what’s most valuable is not their published listings, but what are called “pocket listings”. “Pocket listings” are parks that are not publicly on the market, but that they disclose to what they consider to be qualified buyers. Some of the best deals are found among these “pocket listings”. You must get in touch with each broker separately to learn what they have to offer because the brokers do not exchange these listings with one another. Despite the fact that it can take some time, it is definitely worthwhile. Most of the great deals we’ve purchased over the past four years have come from this source. There are many options to choose from because some brokers have as many as a dozen pocket listings available at once.
Cold Calls
Calling mom-and-pop park owners and asking if they want to sell is a very common method of obtaining leads. Just a phone will do to get you going. In this way, we have acquired some fantastic bargains. But unlike online listings and broker listings, the difficult part is that you are exerting all of this effort just to find those few parks that are for sale and at a set price. However, because it’s more difficult when you succeed, the outcomes can be better.
Direct Mail
In this attack, you write or send postcards to park owners to inquire about their interest in selling. The idea is the same as cold calling, but because 500 pieces of direct mail can be sent out in an hour, you can close more deals faster. Since our response rate ranges from 1% to 10%, you should receive a steady stream of calls as a result of your efforts. However, many of these will be people who demand much more than you are prepared to pay.
Drop-ins
Of all the plans, this one requires the most work. To speak with the owner, just pull into a mobile home park. Of course, the issue is that it takes so long to complete. Every mom-and-pop business owner will also want to chat with you for hours out of sheer loneliness. Only parks that we like and that have not responded to our cold calling or direct mail use this strategy.
What You Need To Know About Getting Approved By A Mobile Home Park?
Having the financial muscle to buy mobile homes in a park doesn’t mean you’ll be accepted wherever you want.
Each mobile home community, its land, and its mobile homes are governed by a set of rules and regulations. Before being accepted by the community, a proper procedure is followed.
The Dos And Don’ts Of A Mobile Home Park
Do your research and become familiar with the rules because each community has its own set of regulations. For example, does the community allow pets? This will be your top priority if you love animals, I assume.
If you don’t know this information, you might move in and then discover that pets are not permitted, leaving you at a crossroads.
You’d have two choices in these situations: getting rid of your pet or moving out of the mobile home park, which can be expensive.
Additionally, it would be in your best interest to pay the mobile home park an early visit and decide if the location appeals to you.
Review The Lease Agreement
Before choosing a mobile home park to live in, request a copy of the lease agreement and carefully read it. Any future issues will be easily resolved by referring to the lease agreement as a guide.
Hiring a lawyer to review the lease agreement is an option that would perfectly assist and spare you from the headache of such a process because it’s possible that the lease agreement may be overwhelming.
Fill Out The Application Form
Filling out the application form is an indication of an agreement with everything and that you are interested in joining the mobile home park. Your social security number, employment history, and monthly income are among the details of your personal information that you must provide here.
You will also give permission to contact potential employers, and past landlords, and to check for any criminal records if any.
Consent To Credit And Background Checks
You can anticipate the park asking about your credit and criminal history. Refusing to disclose this information or lying would be a grave error.
They will have questions about you as a result, and it is likely they will assume you are concealing information from them. If you want to join the park, cooperate and provide the necessary information.
If a mobile home park doesn’t know you, they won’t be happy to welcome you. Conducting a background check is customary in the business world.
For safety purposes, the community will scrutinize your background and ensure you satisfy their set of profiles. They might inquire about your prior living situation and your motivation for moving, for instance. They’re likely to accept you if you’re convincing enough.
How To Finance Your Mobile Home?
As was already mentioned, manufactured or mobile homes are generally more affordable than conventional real estate homes that are constructed on a specific site. Therefore, don’t be misled into believing that the price of a mobile home is a piece of cake.
To put it in numbers, mobile homes cost anywhere between $50,000 and $100,000, on average. This is far more than the majority of people can pay immediately without feeling the pinch.
To accomplish your goal, financial assistance might be required. Finding a suitable lender can be difficult because mobile homes aren’t considered traditional real estate and are instead thought of as personal property.
In the end, conventional lenders won’t grant you a mortgage for a mobile home in a park. Sounds tough, right?
Some of these financing options include:
● Personal Loans
● Fha Loans
● Va Loans
● Rent-to-own
Personal Loans
A personal loan is one option you may choose to finance mobile homes. You can finance almost anything with a personal loan. Although these loans provide flexibility, one drawback is that they have much higher interest rates than other loan types.
The benefit is that, unlike most other mortgages and auto loans, you won’t lose your house if you can’t make your payments. In addition, unlike traditional mortgage loans where you frequently have to provide collateral, it takes less time to complete the application, saving you from going through a tedious process.
Having said that, personal loans might not be able to provide the full amount you require because they frequently have a $25,000 to $50,000 cap on their maximum amount. If you find a personal loan that extends beyond that, you should seize the opportunity and buy your mobile home right away!
Fha Loans
FHA is a government-backed loan that often has generous terms compared to other loans but under certain conditions. It allows the applicant to finance the purchase of a mobile home, the land on which the mobile home is situated, or both.
Prior to approving a loan for the borrower, the FHA program will check to make sure the owner’s mobile home is their primary residence. Remember that the FHA insures mortgage loans rather than granting them; this is done to encourage mortgage lenders to extend more loans.
So, if the FHA won’t lend, how exactly do you get the money? You must, however, locate a bank or other financial institution that has received FHA approval.
Va Loans
In order to finance your mobile home or even the land, a VA loan would be the best option for veterans. Loans made to military personnel are frequently insured by the Department of Veterans Affairs.
The best thing about a VA loan is that you are likely to get 100% financing of the loan you need to buy a manufactured home, with a repayment period of 20 years or more, depending on the type of manufactured home you choose.
For instance, VA loans will grant you a maximum 25-year repayment period for a double-wide manufactured home and the lot. A single-wide manufactured home, however, will have a repayment period of up to 20 years.
The VA loan will give you a 15-year repayment period to buy the land if you already own a manufactured home and need a lot.
Rent-to-own
In the case of the rent-to-own option, you and the owner of the mobile home park agree that you will be given the option to rent the manufactured home for a set period of time, with the possibility of purchasing it later. These leases typically have higher monthly rent, with a portion of each payment going toward the purchase of the mobile home.
Having said that, the credits are only usable if the renter chooses to exercise the option to purchase within the time period specified in the lease.
People who need to improve their credit or who do not have enough money for a down payment should definitely consider this option.
Tips To Use For Getting Mobile Home Financing
While many lenders may be available to offer financial assistance for your mobile home needs, you, on the other hand, have to meet the minimum threshold to get approved.
Keep An Eye On Credit Score Reports
Lenders will want to look at your credit score first. Your chances of quickly getting the loan approved increase if your credit score is good.
A lower interest rate, which can ultimately save you money when purchasing a mobile home, is an advantage of having good credit.
Compare The Financial Options
It should be noted in your mind that interest rates will vary in an open market.
Therefore, comparing lenders will enable you to pick one with better terms.
Instead of picking a lender hastily without doing any further research, isn’t it worthwhile to put in the effort?
Decide If The Land Will Be Part Of Your Plan
You’re likely to get approved by a financial institution if you own the land and mobile home.
The land ensures the asset’s stability because it is improbable to pick up and leave.
Please note that lenders have different requirements; as a result, find out if the loan product they offer will likely be used to finance the purchase of both a mobile home and land.
Review Your Loan Application
Make sure all of the application’s information is accurate and factual. You won’t hurt yourself by spending a little extra time going through each step.
Transparency is key, as many lenders will want to know that they are dealing with a trustworthy client.
Benefits Of Buying A Mobile Home
These are the positives you will experience when buying a mobile home:
Environmentally Sound
A report by the Manufactured Housing Institute indicates that mobile homes are constructed in a way that yields up to 90% less waste than a site-built home.
Compared to conventional real estate, this method of home construction is more environmentally friendly.
Safe And Quality Controlled
Many people might believe that purchasing a new mobile home is improper because it is thought to be weather-vulnerable, but the truth is that these contemporary mobile homes are made in factories and are built in accordance with the U.S. Department of Housing and Urban Development (HUD) Code, which ensures their general caliber and capacity to withstand any kind of weather.
For the record, a mobile home is a house constructed before 1976, the year the HUD Code came into force. Manufactured homes are those constructed after 1976.
Ability To Live More Simply
Living in a mobile home, whether it’s a single-wide or double-wide, means low-cost maintenance. Less stress and happier times along with more time to pursue your passions result from lower costs.
You Won’t Break The Bank
The expense of building a home can be prohibitive, especially if your income is meager. If you decide to purchase a mobile home and live on a tight budget, you can still lead a fulfilling life in your own home.
A mobile home is relatively simpler to acquire, requiring less information to build and complete the purchase than a traditional home, which can result in a lot of unforeseen costs.
Conclusion
If you look in the right places, it is not difficult to find literally hundreds of parks to buy very quickly. You should find the perfect park to purchase using these five methods.
