As a mobile home owner for the last 7 years, I may have a different perspective. My housing costs about 1/5 as much as friends who bought single family homes have paid. Thus, my mobile home is not an investment, it is a place to live. I can and do invest my enormous monthly savings in other assets - just not Silicon Valley real estate, which I think remains ridiculously overpriced.
In purchasing a mobile home, it is critical to learn about the park. Good parks have long-term, stable management, are owner-occupied, have responsible residents, and have a long track record of keeping space rents low. If you find a home in a park like this, I think it may be a great bargain for you (as it has been for me). If you do not, then DO NOT buy a mobile home. To investigate a park, you should talk with a realtor who specializes in mobile home sales, but you should also do your own, thorough research - walk around talking with residents, drive through the park on a Friday night to see if it is quiet and peaceful, etc.
I hope this helps.
If you buy a condo or home you buy the land and the structure. In the case of the condo yu own the land in common with the other owners, but you still own the land, you do not rent it. These purchases have the potential of appreciating, and generally do over time.
Mobile homes are less expensive, larger, and generally newer than condos and single family homes in the lower end of the market.
You will find variances due to the following factors,
1) Rent Control. The rent increase is limited by the city if the park is in rent control.
2) All age or senior. You will find the 55+ and 65+ parks higher in rent
3) Amenities. Some parks have higher end amenities, common pools, spas, parks, recreation rooms, etc. Also, are any utilities included in the space rent? This will increase your rent (think of it like a Home owners association fee).
If you are looking at a mobile home consider that there are three contingencies and areas of focus,
1) Financing: The age of the mobile will determine the cost of financing or not financing. 1976 and younger get better rates, under 1970 you may have to pay cash or very high rates. Most loas are 20-25 years (very few 30 year loans). Interest rates in the 7% up to 10%. Up front points are higher too.
2) Rental Agreement. You will have to qualify for the rent and the mortgage, typically your mortgage and rent combined needs to be in the range of 1/3 of your income. So if you make $3000 a month your rent and mortage can not be greater than $1,000 a month.
3). Qualifications. You will have to qualify for the community.
Restrictions; If you have children, young adults and pets you will need to verify that the community will allow this. Also, some communities you can not rent your mobile home, or have guest stay for extended periods. what is the parking like, and do they have options for RV storage?
Is the community under any possible changes, such as selling the park, changing from or to rent control? Will the rent change, how is it managed?
These are not all bad situations. Let's look at today's economy and why one may buy a mobile home vs a condo.
Average 2 bedroom 2 bath condo purchase price $300,000, at 5.25% interest per month based on 3.5% 30 year FHA loan (if the condo qualifies)
Your monthly Mortgage plus Mortgage Insurance $1,972, then add $612 per month for property tax, homeowners fees, and add in $ for your casualty insurance your total monthly housing total would be about $2,625
Average a 3 bedroom 2 bath Mobile at $150,000, at 7.5% interest, 25% down over 25 year loan,
Your monthly mortgage would be $887 and estimate rent of $700, add in casualty insurance and your estimated monthly housing total would be about $1,636.
By the way , there are four communities I love to share with people,
one is in Scotts Valley, you own the land but owners must be 55 and youngest 45, many have garages attached.
Another is in San Jose (San Jose has rent control), all age park, very nice community, rents are in the $500 and $600's some have yards and attached garages. The third is also in San Jose, must be 55 to own, youngest resident can be 18, rents around $850, many have yards, privacy and attached garages.
The final is in San Jose, rents are low, all age park, can have larger dogs, and you can rent out your mobile.
Hope this gives you some insight.
You have received lots of good advice below, also keep in mind that purchasing a home is a long term investment. If you purchase in the current market conditions, where the home prices are substantially low, you have a potential of nice return on your investment. You might want to consult a CPA or Tax professional to weigh in the tax benefits.
Best of luck
DRE # 01781926
The simple and clear first disadvantage is that you never own the land that the home sits on - it's always rented space, so that leaves you at the mercy of park owners for rent etc.
The second disadvantage is that, unlike condos or single homes, your mobile home will depreciate in value much like a car, rather than increase in value like real estate. Much of this effect is caused by the fact that there's no ownership of the space.
When you're looking at housing that's so inexpensive that it's almost too good to be true, there's a reason for that...it probably *is* too good to be true.
Condo has Home Owners Association fees from 200-500 per month depending on the complex.
Single family home's have none of this. You don't have restrictions as you do in mobile homes and condo's.
For the money you spend on space rent of HOA fees you could buy a home worth 50-150k more in value for the same payments.
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