How To Get a Good Deal on a Mobile Home (eBook)

Chapter 2

MINE: The Mobile Marketplace

Are you ready to MINE for a good deal? Great. Your Uncle Zally is ready to show you how to do it.

Let me give you two important facts that will empower you as we venture into the marketplace:

Fact 1: There are 8 million mobile homes in the U.S.

And:

Fact 2: You can expect 10% of every neighborhood to be for sale.

Why are these facts so important? Because it means right now there are 800,000 mobile homes for sale, with anxious owners waiting for you to call. Is that enough?

With that many mobile homes for sale, we have to make some simplifying assumptions to narrow down your search. You only want to spend as much time as necessary to find the right home for you, right?

The first simplifying assumption we will make is:

We will only be looking at used mobile homes.

Why? After you scout around you are going to discover another important fact: there are plenty of used mobile homes that look almost as good as the day they were shipped from the factory, because the owners have taken care of them.

There are also used mobile homes that have been abused and need lots of repairs. It’s similar to buying a used car. Some are “creampuffs,” driven only on Sundays to a house of worship and back by Gramma and Grampa, and some are “clunkers,” and have been run to Kingdom Come and back.

Consider another important fact:

Used mobile homes depreciate rapidly in price, like cars.

Is that good for you? Very much so.

It will enable you to save thousands over buying a new mobile home. For example, in my area of Florida, a new doublewide will cost between $50,000 to $100,000, whereas a good used doublewide will cost $10,000 to $20,000, one fifth the cost. Or to put it another way, new mobile homes can cost 5 times what a good used one will cost.

What is wrong with the perception that used mobile homes should depreciate like used cars?

Mobile homes can last as long as site-built homes if given normal care.

A site-built home is any home that is not built in a factory, but constructed on site and intended to remain permanently in place. In other words, it’s your average single family home. I have seen mobile homes that are still comfortable, safe, and healthy places to live, and they are 50 years old. So even though used mobile homes are treated like used cars when it comes to price and depreciation, mobile homes don’t have gasoline engines, transmissions, and tires that get run around on bad roads for 200,000 miles. Cars require substantial care to last more than 20 years. Mobile homes don’t.

The second reason we are going to stick to used mobile homes is:

It is much much much easier to buy a used home.

Notice the three “much’s.”

No doubt about it, you get a wonderful feeling when you buy something brand new and you are the first person to enjoy it. But to capture that feeling with a new mobile home, you will have to spend a lot more money, time, and work, up front.

How so? You will have to select the home you want from more than 25 different manufacturers, decide on a delivery date, and go through a tedious loan approval process. Then you have to pick out a piece of land to place the home on, and make sure zoning allows you place a mobile home on it because there may be restrictions on where you can place them. After you secure permits so you can place your new mobile on the property, you have to prepare the land, transport and move the new home onto it, and then hire licensed contractors to complete the set-up process. Do you see how it can take a lot of time and effort to set up a new home?

With a used home, you write an agreement, inspect the home, arrange a loan, and move in. Sounds a lot simpler, doesn’t it? It is.

Now, given we’re only going to search for used, or pre-owned, mobile homes, there is a second assumption we are going to make to simplify our decisions.

We are going to assume the mobile home isn’t mobile.

That sounds kind of odd, doesn’t it? Let your Uncle Zally explain.

In many states, it costs between $2,000 to $4,000 to detach a singlewide from where it currently sits, transport it to a new location, get a new permit, and then set it up again. When it comes to moving a doublewide, the same process costs twice as much, between $4,000 to $8,000 on average. (I will explain what a single wide and double wide are right after this, for those of you who don’t already know.)

If you ever want to move, because of the cost, it usually makes more sense to sell your current mobile home, and then purchase another mobile home at your new destination. If you don’t want to do that, and you want to keep your current mobile home when you change locations, then singlewides are the lower cost alternative.

In my own experience, I have found people rarely move the mobile home they are living in to a new location. Perhaps less than 5% of mobile home owners I have known moved their current mobile home, as opposed to 95% who sold the mobile home they lived in, and bought another at a new location.

Speaking of being mobile, the mobile home industry feels opposite emotions about that part of its heritage. A few decades back, manufacturers got together and changed the name of a mobile home to a manufactured home, because it was built in a factory. Their public relations departments told them that mobile was not a warm and fuzzy concept in the public’s mind when it came to their home – rather, they wanted their home to feel permanent and unchanging, not movable and changing. Sometimes, I come across a seller who gets upset when I refer to their home as a mobile. They say, “I own a manufactured home, not a mobile home!”

Well, there is no difference between a mobile home and a manufactured home, other than a preconceived notion in some people’s minds. This author thinks the mobility of a home can have powerful advantages to some people, those who need to move around a lot in their careers, and especially investors, who may need to move their rental homes around.

Now that we have made the above two assumptions, that we are only looking at used mobile homes, and we don’t care about moving the home, there are only two simple decisions for you to make. The first is:

Do you want to own the land under your mobile home, or lease it?

How you answer determines where you will live. It will be:

1-  In a mobile home park if you want to lease your lot

2-  Outside a mobile home park if you want to own your land

Each has its own advantages, and disadvantages. It is estimated that half of the new mobile homes built each year are placed in mobile home parks, and the other half, on private land, so the market is now equally split as to which land ownership it prefers. We’ll discuss mobile home parks first.

There are over 50,000 mobile home parks in the United States, about 1,000 for every state on average, so they have always been a popular alternative. If you choose to live in a mobile home park, you will discover an amazing fact:

When you lease the land, it will cost you a lot less to buy a mobile home.

In our area of Southwest Florida, you can buy excellent used mobile homes in mobile home parks for less than $10,000. In some cases, you can buy them for less than $5,000. In fact, as I write this, we have mobile homes for sale in some of our own mobile home parks for $3,000, with only $500 down, and $95 per month seller financing (the lot rent is an additional $295/month.) How’s that for affordable housing? It is only a fraction of $90,000, which is the cost of a median priced, site-built single family home in our area, as I write this.

There are other advantages to mobile home park living. Many mobile home parks have amenities like swimming pools, clubhouses, playgrounds, health clubs, etc. Also, your neighbors in the mobile home park will usually have gone through a criminal and financial screening process, and there will be rules and regulations for acceptable behavior. Furthermore, there are parks that only allow residents that are over 55, and parks where young families with children are allowed.

The major advantage of living in a mobile home park is this:

You can live in your own mobile home in a mobile home park for less than the same monthly cost as renting an apartment.

Unlike an apartment, you own your home, with a parking space right next to it, and a yard (which you lease.) Your home is mobile and you can take it with you when you move, if you want to, although 95% of the time, you won’t want to.

Also, unlike an apartment, you are building up equity, instead of just a pile of rent receipts. How? If you finance your mobile home, then with each payment you make, you have less that you owe on your mortgage, until the bright day comes when you have no payments to make – you have paid off your loan. You still have lot rent, but lot rent is usually half or less of apartment rents, and you own a mobile home that is worth something, should you decide to sell it, and get back what you paid.

What are the disadvantages of living in mobile home parks? First and foremost, you will have to pay lot rent on the land under your mobile home, which has a tendency to increase every year. The average lot rent in the United States is around $250 per month. I have seen it range from $100 per month in some Southern areas, to over...