Home Buying in San Jose>Question Details

FirstTimer, Home Buyer in Santa Clara, CA

What are the disadvantages of a mobile home?

Asked by FirstTimer, Santa Clara, CA Thu Feb 28, 2008

I've never lived in but I am curious: you can get one with as much living space and as many BRs/BAs as a house but for less than a hundred thousand (in a decent neighborhood like sunnyvale). I know I'm missing something because it seems like a really good deal--better than renter or buying a house or condo. I know you probably have to pay rent on the space it occupies but what's the drawback? I've never lived in one and I'm sure there must be something really wrong with it for the cost to be so low!

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I usually advise my clients that purchasing a mobile home in an established park is a "lifestyle" - not an in vestment. The market for mobile homes tend to be every 5 years - Interest rates are higher on your loan and not all lenders finance mobile homes. When the housing market is good and rents are low, generally mobile homes are on the bottom of the list of "sold" properties. However, in today's market, many mobile home buyers are tired of paying high rent and opt to buy an affordable home. You have the mortgage interest as a tax write-off and you do pay property taxes which is also a tax write-off. The newer mobile homes can sell for as much as $200,000 to $300,000 depending on size and amenities. Space rent is generally increased once a year. There is minimal upkeep - newer models are energy efficient. Similar to condos, you have park rules which can be restrictive to someone not accustom to "following guidelines".
Web Reference: http://www.blythelkern.org
1 vote Thank Flag Link Fri Feb 29, 2008
First, yes mobile homes go down in value, but then again, so do site built homes. It is the land underneath them that goes up in value. If a house and a mobile are built on rented land they will both depreciate if not improved and maintained.

I think mobiles are an excellent investment, there is always someone who can afford to buy them and always someone who can afford to rent them, unlike higer-end homes. My husband and I own several of them (on land) and we love them as investment properties. Mobile/manufactured homes are also about 30% of the single family housing in the united states, and about 40% of the homes in retirement states like AZ and FL.

I used to have license to sell mobile homes that are not on land (in a park where you pay rent) and I let my license go. In my opinion, at least in this area, mobile home parks can be quite a burden and come with a LOT of baggage you wouldn't expect. If you buy a mobile, buy the land underneath it too, don't rent it unless you have thoroughly investigated the park, and their rules and rent increase policies etc. Good Luck!
1 vote Thank Flag Link Thu Feb 28, 2008
Hi First Time Home Buyer - There are some draw backs to purchasing a mobile home. Certain things you can't write off on your taxes like space rent (I'm not a CPA). Like with anything you do have pro's and con's. It really depends on your needs. You have to be approved by the park manager to rent the space, some parks managers are nicer than other...guest parking can be an issue, but you can have the same issue living in a condo complex. Blythe, one of my successful agents lives in a mobile home in Sunnyvale. She loves it. My brother lived in one, my sister lived in one. They both own very nice house now. It can be a stepping stone. The best advise is to talk with someone who has experience with selling them. As with shoes, one size does not fit all...
1 vote Thank Flag Link Thu Feb 28, 2008
Yes a newer mobile home has other taxes but it's not for the land it sits on. HUD has a great link below on their website all about manufactured and mobile homes that may be useful to you.
0 votes Thank Flag Link Thu Mar 13, 2008
In Santa Clara County you do pay property taxes on a newer mobile home, but not on the land, but you can write those taxes off . Older mobile homes continue to pay a "registration fee". Andrea is correct in that you cannot write off your space rent and in Sunnyvale that usually runs $800-$900 per month and includes water, basic cable and a bulk rate for gas and electric and security. Some parks include garbage collection but that depends on the park. So your tax write-off would include the interest on your mortgage (if you have one) and property taxes if it's a newer home.
0 votes Thank Flag Link Thu Mar 13, 2008
You have to have excellent credit to be approved for the park. Every person who will be living in your home must be park approved. Also, some parks don't have rent increase restrictions, so you may buy the home cheap, but end up paying over $1000 a month for the space. When you do purchase a mobile home, the park may ask for 2 months of space rent in advance. If you can get through of this, you will find some beautiful mobile homes out there!
0 votes Thank Flag Link Thu Feb 28, 2008
Thank you very much for your answers. I'm grateful to you all for helping to understand mobile homes.
0 votes Thank Flag Link Thu Feb 28, 2008
Dear First Timer, Brendon had a good response with the answer that they don't usually increase in value. In a rental park you also take a chance on exactly what the space rent is going to do- what if you buy and the space rent increases dramatically in the next few years?

Many people feel that mobile homes in parks where you own your own land are a better investment. The value of the land obviously will increase.

I agree though, that for some people they are a great way to get your foot in the door, because even if the price of the home goes down a bit (that of course depends on the park, etc.) your home probably will not go down as much in value as the amount you spend each year in rent! Many mobile homes are very lovely and spacious inside! Some of the new ones even have a second story now!

Good luck to you!
0 votes Thank Flag Link Thu Feb 28, 2008
The drawback is it is a poor investment, mobile homes almost always decrease in value. Any money you spend fixing it up is generally up in smoke. You're buying a vehicle that acts as a home. That is not to say that it may not be the best move for you now financially. But do not think you'll get all your money back!

Brendan Murphy
0 votes Thank Flag Link Thu Feb 28, 2008
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