9+ Renting a Mobile Home Pros and Cons Explained

The real estate market has become so competitive that finding affordable investment property is nearly impossible. Real estate investors now have to consider alternative ways to keep the passive incoming coming.

Before investing, let’s look at whether mobile homes are good rental properties.

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Investing in a Mobile Home as Rental Property

You have two approaches to consider when investing in a mobile home as a rental property.

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1. Purchase one of a few mobile homes. You can invest in a few mobile homes inside an existing park and rent them to tenants. But, it means that part of the rent must also cover what you pay for the lot rent.
2. Buy a mobile home park. Many investors are buying large mobile parks and then leasing the lots to mobile homeowners already in the community.

Pros of investing in a mobile home for rental property

Cheaper cost per unit

While home prices are beginning to decline, stick-built homes, even single-family structures, are still a considerable investment. It’s especially true if you plan on a large down payment. 

On the other hand, mobile homes can cost as little as a few hundred dollars a month when financing the unit and take a fraction of the time to pay off compared to traditional real estate.

The initial investment for an entire mobile home park will be the land. The location and size are still the major factors in terms of price.

Even with insurance policies and property tax, a large mobile home park still costs less than multiple single-family homes or an apartment complex.

Constant demand

Some regions of the US have more mobile parks than others. For example, Texas has 5,176 mobile parks, while Connecticut has less than 150.

But, regardless of the region, the demand for mobile homes and mobile home parks is high.

Over 22 million Americans already live in mobile homes, and 90% of those are satisfied with living in one. It means mobile home tenants are likelier to remain renters than traditional home renters.

Maintenance costs

When it comes to upkeep, a mobile or manufactured home will always beat out a stick-built home.

The lower maintenance cost of a mobile home is due to several factors.

• Mobile homes are smaller.
• Less complicated electrical wiring and plumbing.
• Manufactured homes are built according to HUD standards and regulations.

Maintenance is even less for a mobile home park owner because the tenants will attend to their repairs. The park owner is responsible for maintaining the roads, shared spaces, and utility connections.

Inexpensive renovations

Renovating or flipping a mobile home comes with a lower price tag than with a stick-built home.

Some of that is due to renters of traditional homes having higher expectations. But mostly, it is because of the low cost of replacing everything from the roof to the windows.

For example, it can cost $1,000 to $3000 to replace a mobile home roof, while it can cost as much as $10,000 for a traditional home roof.

Cons of investing in a mobile home for rental property

Lower appreciation

Mobile home aesthetics and technology have come a long way, while the stigma of pre-HUD days still exists. This leads to some cities having strict zoning restrictions. Some go so far as not allowing mobile homes at all.

The misconception results in less appreciation over the lifespan of the mobile home or mobile home park.

As a park owner, you can add to the curb appeal by providing quality common space and other infrastructure. 

Natural disasters

Most mobile homes aren’t built on a foundation. It means they’re less durable than a traditional home and susceptible to damage or complete destruction during extreme weather.

Hurricanes, tornadoes, and earthquakes are a manufactured home’s greatest enemies. 

Park-owned homes

You must consider all the risks if you choose to purchase both the land and the mobile homes.

A brand-new mobile home begins to lose value the moment it leaves the manufacturer. Not to mention that when any issue arises with a unit, it’s up to you to do the repairs and maintenance, 

Many mobile park owners choose to rent lots rather than entire units to address long-term maintenance issues and tenant turnover.

Financing

Financing a mobile home works differently than a traditional home. A mobile home is considered real property, like a car, so you can’t apply for a mortgage.

You will likely have to find a hard money loan that will come with higher-than-average interest rates.

Renters

If you rent a mobile home on someone else’s lot, you have to worry about the tenant obeying the park’s rules. A lousy renter can cause the park owner to evict them and you from the park, leaving you high and dry and paying lot rent for an empty mobile home.

Is mobile home rental profitable?

Mobile home rental properties have a high rate of return (ROI), but it does come with some risk.

Research rental property in your area by comparing traditional home prices to mobile home averages.

By understanding the market, you’re better at ensuring that you get a return on your investment.

What state is best for mobile home investing?

In Texas, there are thousands of mobile home parks and many manufactured home factories, which makes it the top state for many investors.

Florida and North Carolina are two more states that are good for mobile home rental properties.

Why are mobile homes, not a good investment?

Mobile homes depreciate over time, while stick-built homes increase in value. 

You aren’t going to resale a mobile home for profit like you can a traditional house.

Are mobile homes a good investment in 2023?

Because traditional home development remains competitive, investing in mobile homes and mobile home parks will remain a popular alternative.

Mobile homes depreciate, but you can slow the process with maintenance and renovations.

Or, you can purchase a large mobile home park which allows you to rent lots to outside mobile homeowners, elevating the responsibility. And land tends to appreciate.

FAQs about Mobile Homes as Investments

Is a mobile home ever a good investment?

A mobile home can potentially be a good investment in terms of long-term value, although its appreciation may not be as rapid as that of a conventional home. If you choose to sell your mobile home in the future, it is likely that you will at least recoup your initial investment or possibly make a small profit. However, it is important to have realistic expectations and not anticipate significant financial gains from selling a mobile home.

Do mobile homes lose value quickly?

Mobile homes tend to depreciate in value rapidly, similar to new cars, as soon as they are no longer in the factory. This is in contrast to stick-built homes, which typically appreciate in value over time due to the fact that the owners usually possess the underlying land.

Why do mobile homes depreciate so fast?

Mobile homes depreciate quickly due to their location. The value of a mobile home is greatly influenced by its placement and proximity to amenities. Mobile homes situated in desirable areas with easy access to amenities tend to depreciate at a slower rate.

Can you make money on a mobile home?

You can make money on a mobile home by investing in this often overlooked and lucrative area of real estate.

Can you make money flipping mobile homes?

Flipping mobile homes can indeed be a highly profitable venture. Contrary to common misconceptions such as the belief that there is no market or buyers for mobile homes, or that obtaining a loan for them is difficult, these notions are largely unfounded. While it is true that securing a loan may present a minor hurdle, there are ways to overcome this challenge, which we will elaborate on later.