| Why mobile home rentals? Get past the prejudice and | | | | Mobile home rentals on land might appreciate more |
| look at the numbers. In our town, for example, a two | | | | slowly than the "regular" house, but faster loan |
| bedroom house costs $130,000 and rents for $800 | | | | pay-down usually covers this factor. Pay less per |
| month. A $50,000 mobile home on real estate gets | | | | month, have positive instead of negative cash flow, |
| $500/month. Cash-on-cash return on investment is | | | | and build more equity! Don't expect your real estate |
| obviously higher with mobile homes. | | | | agent to tell you this. |
| Don't let the half-truth that mobiles depreciate in value | | | | Mobile Homes - Cash Flow |
| keep you from investing in them. They lose value in a | | | | In the example, you'd lose about $150/month on the |
| park, on a rented lot, but not on real estate. My first | | | | house, after the payment, taxes, insurance, repairs and |
| home was a mobile, bought for $19,000 and sold for | | | | other expenses. You'd have cash flow with the mobile |
| $45,000 fourteen years later. | | | | home, and after ten years (when the loan is paid off), |
| House rentals here usually have negative cash flow, | | | | you'd have a lot of cash flow. |
| while mobile home rentals have some cash flow. Still, | | | | Mobiles are cheap to maintain. The furnace died in |
| investors prefer houses, believing they'll build equity | | | | rental I owned, and I replaced it for $1,200, much less |
| faster, but is that true? Only during times of fast | | | | than a furnace for a larger home. For $200 you can |
| appreciation. | | | | have the roof tarred, instead of $5,000 to re-shingle a |
| Equity Building With Mobile Home Rentals | | | | traditional roof. Windows, plumbing, doors - they're all |
| Buy a house for $120,00 with $20,000 down, and take | | | | cheaper. Property taxes and insurance are less too |
| out a $100,000, 6%, 30-year mortgage. You'll have a | | | | (be sure you can get insurance, since some old |
| payment of $599.60. Of the first payment, $500 will go | | | | mobiles may be uninsurable). |
| to interest, and $99.60 to principal. You only built equity | | | | The Bottom Line |
| of $99.60. This ignores appreciation, but only for the | | | | $20,000 can buy two mobiles, with $10,000 down on |
| moment. | | | | each, or four with $5,000 down on each, instead of |
| Second scenario: Find a mobile home for sale on land, | | | | one negative-cash-flow house. The two investors in |
| and borrow $30,000, at 8%, amortised over 10 years. | | | | our town that own most of the mobile homes always |
| Higher interest and a shorter term is normal with | | | | have cash flow, and have built millions in equity. Others, |
| mobiles, but being done with payments in 10 years | | | | following their prejudices, struggle to make money with |
| instead of 30 sn't all bad. The payment will be $363.99. | | | | their "nice" rental homes. So when you're looking for a |
| The first month, $200 will go to interest, and $163.99 to | | | | good investment, don't forget those mobile home |
| principal. You built more equity in this scenario. | | | | rentals. |