My Continuing Saga in Mobile Home Buying

I'm continuing to learn much more every day about all aspects of mobile home buying and ownership. I'm also learning more each day about blogging and how to use the internet to share what I've learned. This blog has been a great start, but I am moving toward a website that will be able to present all the info in an easily accessible format. In the meantime, my blog will be moving to that website, and so future posts will be available there. Please go to my new blog to continue to learn about mobile home buying, and when the website will be up and running. There's even an RSS Feed you can sign up for to be alerted when there's a new post. See you there!

How I Found A Mobile Home to Buy

Now that I was convinced of the great advantages of mobile home buying, how did I go about finding a good one to buy? First of all, I had to decide whether I wanted a new mobile home or a used one. Like anything, there is a trade-off with price and condition, so it depends on your budget. Like most people, I decided to get a used home, and like with traditional home buying, I had to start with a real-estate agent, and ideally one that specializes in mobile homes. So, I drove around a couple of nearby mobile home parks and looked at the for-sale signs. The signs were from a variety of companies, but I noticed one company that had over half of the listings in the park. I checked out their website and called them up to get an agent that could help me find a great home. They helped me figure out how much I could afford, what park(s) might be best for me, and then took me to look at appropriate listings.

Another great advantage with mobile home buying is that even if you start out in a used home, you can easily trade it in for a new one later on, just like you trade in a car. I could get a brand new home, in the same spot as my old one, without having to move to a new neighborhood. Of course, I'd still have to pack up my stuff and live in a hotel or with friends/family for a few weeks, but then I'd have a brand new home! And if you've been in the used home for at least a year, the park cannot raise your space rent to the current market value, but must keep it at the same amount as before. This is a great strategy: find an old used mobile home that has a really low space rent, buy it and live in it for a year, then trade it in for a brand new home at the same low space rent!

Who Can Benefit From Mobile Home Buying?

The more I found out about mobile home buying, the more I realized what a great fit it was for me and my situation. And what's more, I realized just how great it would be for so many other people as well. Here are just a few:

1. Pet Lovers. So many apartment complexes don't allow pets, or require a large deposit to have a pet, but the vast majority of mobile home parks allow pets and don't require any deposit. There may be some restrictions on how many pets you can have, and some parks also limit the size or type of your pets (i.e. no pit bulls and no dogs over 50 pounds), but most likely your pets will fall within the restrictions.
2. First-time buyers. Mobile homes a great for starting out: they're inexpensive and require a low down payment, so anyone who is currently renting can get into one a lot sooner than a traditional home.
3. Young families. Most mobile home parks welcome children and have their own playgrounds and recreation areas, providing for a great sense of community with other families in the park.
4. Retirees. There are mobile home parks that are specifically for those 55 and older. They provide the same great sense of community with other retirees, and almost all have rent controls in place so that your space rent never goes up more than 3% a year. This increase is therefore covered by the annual cost-of-living increases in Social Security payments, so there's no worries.
5. Investors. Most mobile home parks do not allow rentals, but there are plenty that do if you look around. In most parts of the country, traditional housing prices have increased far more than the local rent rates, so investors are forced to either put up an enormous down payment, or settle for a negative cash flow for the first few years. With mobile home buying, however, rental prices are well in line with the home costs, so positive cash flow is there from the beginning. Here in the Bay Area, a $10,000 down payment can net you $200 in cash flow, which is a 24% annual return in the first year, and that doesn't include appreciation!

My Mobile Home Buying Process Takes Shape

Okay, so now the catches are out of the way, what other benefits could there be to mobile home buying? The first benefit I discovered was that not only are mobile homes cheaper than traditional homes, you also get a lot more space than in any apartment. A typical double-wide mobile home has 1400-1500 square feet of space, with 3 bedrooms, 2 baths, kitchen, dining room, family room, laundry room, and porch. Even combining the space rent with the mortgage, I would be paying less per month than with a typical 2-bedroom, 900-square-foot apartment. And of course, with a mobile home, you are separate from all your neighbors: no shared walls, ceilings, or floors, so it's more private than even a condo or townhouse!

With mobile home buying, you also have your own yard. Granted, the spaces in most parks aren't gigantic (they want to have as many spaces as possible, after all), but you have plenty of room for a modest garden and outdoor table. Most parks also have some community facilities available to residents: a swimming pool and hot tub, weight room, playground, basketball court, recreation room (which you can reserve for larger gatherings), shuffleboard courts, pond, laundry rooms (if your home doesn't have one), everything you would find at the nicest apartment complexes. Smaller parks may not offer all of these amenities, but there are plenty of middle-sized and larger parks that do, and it didn't take me long to find one in my area that had them all and was in great location.

Then, I discovered more financial benefits. Just like with a traditional mortgage, the interest is tax deductible. Of course your mortgage is going to be much smaller and therefore so will your deduction, but that's a good thing, right? Property taxes are also much lower for mobile homes than with traditional homes or even apartments (believe me, your apartment rent includes property taxes). And here's the big kicker with mobile home buying: the deposit. When you move into a mobile home, the park will require a deposit in addition to the first month's space rent, just like with an apartment. Apartment complexes will keep your deposit until after you move out since there is always the possibility that you will damage your residence. With a mobile home, however, you own the residence, so the deposit is only necessary until you establish a track record of space-rent payments. Typically, after 12 consecutive months of timely payments, the park will refund your deposit. That's a nice bonus to look forward to after one year!!

Mobile Home Buying Basics

So, I started looking into mobile home buying. I knew almost nothing about them, and especially how they differed from traditional site-built homes, so I was basically starting from square one. The first thing I found out is that mobile homes are much less expensive than traditional housing. I already knew they were cheaper, but I did not realize how much cheaper, at least compared to housing prices in the Bay Area. Then I found out that banks will finance mobile home purchases, and they only require 10% down instead of 20%. After doing some quick math, I realized my monthly mortgage payment would be just a fraction of what it would be for other housing. There's got to be a catch, right? Well there is, sort of.

First of all, mobile homes aren't expected to last as long as traditional housing, so banks don't want to give you a mortgage for longer than 15 years. That is good, though, since even though your payment will be a little bit higher than with a 30-year loan, you will pay down the balance a lot faster and build equity sooner. And with proper maintenance and care, a mobile home can easily last 40 years or more. I could actually own my place outright after just 15 years!

Another catch is that interest rates are higher for a mobile home loan since there's always the risk you could hitch your home up to a trailer and skip town without telling the bank, taking their collateral with you. But the difference in rates is not that much, regardless of your credit, and considering how much less the loan amount is, the monthly payment is still quite small.

The biggest catch with mobile home buying is that your mortgage payment isn't the only part of your monthly housing expense. The reason mobile homes cost so much less than traditional homes is because you're only buying the home itself, not the land under the home. Here in the Bay Area, it's the land value that inflates home prices so much. With a mobile home, you rent the land for your mobile home each month, usually in a mobile home park. Of course, this means that you are still throwing away some money each month, but it's a lot less than with an apartment, and you still get equity build-up with mobile home buying, unlike an apartment renting which gets you nothing.

The Mobile Home Buying Conversion Begins

Hello, my name is Brad. I'm a 30-something single man living in the San Francisco Bay Area. Having lived here for most of my life, I learned at an early age about the high cost of living here. Most of this high cost manifests itself in the inflated housing prices. Whether you're looking to buy a condo, townhouse, or single-family residence, you need to be prepared to shell out big bucks (several hundred thousand dollars for even a small condo!). With banks tightening up credit now, you also need to provide a decent down payment (in the tens of thousands of dollars), then pay $2,000-$3,000 a month for your mortgage. Granted, prices here have come down considerably as the real-estate bubble has popped, but they still leave most people looking for alternatives.

Renting an apartment provides such an alternative, as rent rates have not increased as rapidly as housing prices. Nevertheless, it still costs close to $2,000 a month to rent a decent apartment, or $1,200 a month for a studio in a bad neighborhood. For years, I have rented modest apartments in the hopes I could one day afford to buy my own place, but with so much money going down the drain each month for rent, it was very difficult to save anything for a down payment, let alone the tens of thousands of dollars now required. And this is in spite of working in a salaried position at a Fortune 500 company. It was very frustrating, but I didn't think I had any other choice. Then one day not long ago, a friend advised me to look into mobile home buying.

Like most people, I initially brushed off such an idea: mobile home buying? I had heard about mobile homes and trailers, and everything I had heard was negative. They were cheap, poorly constructed, went down in value, and the parks were in bad areas with lots of degenerates ("trailer trash") living there. In short, no self-respecting young man would consider mobile home buying, right? Yet life sure is funny. Sometimes we end up doing something we never imagined we would do, and not only do we not hate it, we actually enjoy it and become thankful!