The Power of Mobile Home Rentals | Think Realty | A Real Estate of Mind
Investing Strategies

The Power of Mobile Home Rentals

Power-of-Mobile-Homes

How turning mobile homes into real property brings more cashflow.

In the mobile home rental market, in most cases, investors put in half the money for double the cashflow in return. With the right strategy, investing in mobile homes creates passive income streams that add value to your clients, your business, and your bank account while you are spending time with the people you love and doing the things you enjoy.   

How can real estate investors create this fast and consistent cashflow? The shift in mobile homes as personal property to those that are real property is key. When mobile homes are real property, it means the land and structure are tied together. Instead of depreciating like personal property mobile homes where the land and structure are separate, real property values fluctuate with the real estate cycle. Real property mobile homes allow the investor to participate in market appreciation while receiving better rent ratios afforded by mobile homes. It is not uncommon to hold rentals that have doubled in value since purchasing them five to seven years ago. 

Personal property mobile homes in parks can be profitable as well. If you have the funding to own the entire park, then that’s a great angle, but that’s not the story for most investors. Instead, we need a strategy that requires a lower initial investment, great cashflow, and the ability to participate in appreciation. That is what investors can experience with real property mobile homes.   

Often, you can get large discounts on the properties because of less investor competition. This purchase discount along with a strong rental market and solid property management allows for consistent, steady passive income each month. Imagine the feeling you will have when your monthly rent checks arrive in the mail, or what I call “mailbox money.” Although the term “mailbox money” is still fun to say, it is better to have systems in place to allow transactions to be 100 percent online. For example, now on the first of the month, my company’s entire overhead and more is covered with automatic ACH rent payments. 

When my business partner and I speak to new and seasoned investors all over the country, most of them want monthly recurring income that covers personal expenses, business expenses, and that gives them the freedom to do what they want. Passive income from mobile homes eliminates the stress that active income investors (wholesaling and fix and flip) face — wondering if they will find a buyer and close the deal in time. Once you build up your mobile home recurring income, your profit from more active sources can become extra money because your rental income has already paid all your bills. 

Let’s discuss the rental demand for these mobile homes. Who’s looking to rent mobile homes in these current economic conditions? Recently, the prices of stick-built homes have been on the rise in most markets and rental rates have been steadily increasing in the last five years. Average incomes for most Americans have not been keeping up, leading more home buyers and tenants feeling priced out of the housing market. Not all price-sensitive customers want to pack their families into tiny apartments or live in less desirable neighborhoods in order to be able to meet their financial obligations. Mobile homes offer privacy and affordability, without sacrificing security. 

One of the most important parts of your mobile home cashflow plan is having access to the best property management available. When we are looking at a potential tenant, we perform background checks, verify their employment, and call their previous landlords. A little extra effort spent qualifying your tenant will save you a fortune in time and money. We start filling our properties 60 days before our existing tenants move out. This gives our team plenty of time to select the most qualified tenant who will be more inclined to take excellent care of our property. 

As for tax benefits with real property mobile homes, it’s important to talk to a seasoned professional. A vital member of your business team should be a CPA who understands real estate. Our real property mobile homes experience the same tax depreciation advantages as a single-family site-build home. 

Mobile home investing can be a great way to quickly add monthly cashflow. If you know what kind properties to target, what areas to focus on, and have access to top-notch property management, you can see results quickly.