Properties that look better than the competition
Most likely, you’ve already read the title of this article. At the four mastermind groups in which I am a member and speaker and at the nationwide events I speak at, I always use this title. People always ask me, “Do you really believe that? Why?”
My answer is always, “Yes, from the bottom of my heart I believe it 100%.” l will explain why manufactured/mobile homes on acreage are truly the best kept secret in real estate investing!
First of all, let’s define this asset class. Whether I say mobile home or manufactured home, they are and mean the same thing. These homes are built in a factory and come in both singlewides and doublewides. My company buys 95 percent doublewides normally from 1,200 to 2,500 square feet, and we buy five percent singlewides from 900 to 1,200 square feet. Don’t confuse this with mobile home parks, that is not the same. Although, I have owned a mobile home park in the past and they can be tremendous investments.
What l am talking about is buying the manufactured homes that are already on the land and they have the exact same classification as a single-family house; they come with a deed of trust or a mortgage depending on the state.
In my company’s business model, we currently buy 10 properties a month in four states: Texas, North Carolina, South Carolina, and Georgia. We have bought over 425 properties in the last seven years and we do it all with private lenders and investors. We have over 100 investors and are deploying over $1 million a month with them inside and outside of their IRA. Stromberg Investment Group believes and follows the golden rule and structures win-win lucrative real estate joint ventures.
We are buying existing homes that are already on the land; we are not moving the home to the land. Then, we fix the home up like new. That is really our secret sauce. It truly looks like a new house when we are done—new carpet, new paint, new air conditioning, new appliances, a new roof if it needs one. Why do we do that? First, it makes it super easy to lease. Our tenants love our properties because they look so much better than our competitors’ houses do! It’s great for us and our investors, because it pushes deferred maintenance far down the road because everything is in “like new condition.” Also, we have much lower maintenance costs because we don’t have the foundation problems many single-family homes have. In the Dallas/Fort Worth metroplex, I hear of $30-$50k foundation repairs. If we have to relevel the home, it’s $1,500.
When you say the word “mobile home,” people think of an old 1960 or 1970 singlewide metal sided 12x 60 with tires on the roof. The homes we buy have tremendous construction standards. They are built with two-by-four or two-by-six side walls. They have plywood or OSB flooring, upgraded windows and insulation packages, upgraded appliances, cabinetry, and plumbing fixtures.
My dad who was a mason contractor and a builder in the Chicago area came to visit me in Texas. He looked at about 15 of my properties and he said, “Wow these are built better than most of the track houses in Chicago!” That’s another reason this type of investment is a real secret because people do not realize how well they’re built. They are built every bit as well as most track houses—and in many cases even better!
Here are some other great advantages that manufactured homes have compared to single-family homes. Manufactured homes are typically one-third to half the cost of a site build/single-family home, so it’s a much lower buy-in price and our investors love it because they can pay cash for these houses and have tremendous cashflow every month! in many cases, the cashflow is literally double what a single-family home would be! It’s also great for tenants too, because not only are they getting more square footage for their dollar, but they’re getting a half-acre to an acre of land, so the kids have a place to play, verses living on a zero-lot line house in the city. These homes come with an FHA compliant concrete foundation, which is really important when you go to sell the home too, because it qualifies for the same FHA financing as a single-family home does. These properties are also in the suburbs and in the country and in most cases have much better school districts than the ones in cities.
My attorney says never use the words “recession proof,” so I am going to call it “recession resistant©” and here’s why: Manufactured homes on land are the most affordable home in America today. They are always in demand. No matter how bad things get, people are going to do two things: they are going to eat first and then they are going to have roof over their head.
For more information on this concept, visit Glenn Stromberg’s company website at StrombergInvestmentGroup.com or give Stromberg Investment Group a call at 682-247-0307
For online courses, visit Glenn Stromberg’s Resident Expert page here.