The last few years have seen a rise in the number of people interested in the possibility of renting out mobile homes.
Many consider it a lucrative strategy to bring in passive income and amass money over time on autopilot.
But is the notion that portable home rental might result in a lucrative investment actual, or is it just a myth?
Let’s check all the possible advantages and downsides of investing in mobile homes to assist you in determining whether or not this is an investment that will provide you with a lucrative return.
- Can you Make Money Renting Out Mobile Homes?
- Possible Advantages Associated with Mobile Home Rentals
- Higher Rent-to-Value Ratio
- Possible Drawbacks Associated with Mobile Home Rentals
- Limited Space
- Value After Purchase
- Creating a Profitable Mobile Home Rental Business
- Conduct Market Research
- Conduct Regular Maintenance
- Perform a Thorough Background Check on Tenants
- Consider Making Renovations
Can you Make Money Renting Out Mobile Homes?
As always, the answer is “it depends”. In this case, it depends on whether you own a plot of land or not.
Let’s break down some figures to determine the profitability of renting out a mobile home that you purchased for $5,000.
- Lot Rent: If you do not own a lot, you will need to rent one. The cost of lot rent can vary depending on location and amenities, but for the purposes of this example, let’s assume it costs $300 per month.
- Utilities: As the landlord, you will be responsible for paying for any utilities the tenant does not cover. Let’s assume that the average monthly cost for utilities is $100.
- Insurance and Taxes: You will need to factor in the cost of insurance and taxes. Again, these costs can vary, but let’s assume they amount to $50 per month.
- Maintenance and Repairs: You should also plan for maintenance and repairs, such as fixing leaky faucets or replacing worn-out carpet. Let’s assume these costs average out to $50 per month.
Given these assumptions, here’s how the math would work out:
- Monthly rental income: let’s assume you can rent out the mobile home for $600 per month.
- Total monthly expenses $500: lot rent $300, utilities $100, insurance and taxes $50, maintenance $50.
- Monthly profit: $600 – $500 = $100
As I said, if you don’t own a plot of land, you would make $100 a month. It’s not worth the hassle. You would earn more by putting the money in a savings account at the bank.
If you own a plot of land, the calculation changes drastically. You would earn $400 per month. That’s a different story, and in that case, it’s profitable to rent out mobile homes.
Also, I researched on Reddit the experiences of people who rent out mobile homes, and here’s what they say:
- I doubt you will end up making money this way unless you own a lot yourself. Seems like you would put a lot of risk on yourself, and I don’t think you’ll net as much as you think you will. Maintenance and repairs on manufactured homes can be quite high, and don’t forget insurance costs. In many cases, manufactured homes are also typically depreciating in value over the years rather than increasing. – BigRedKetoGirl said.
- You would probably be better off trying to purchase a mobile home park and rent out spaces, over time you could purchase more parks and in the end you will own some property that is not really depreciating (land) that you may be able to sell off if you get tired of maintaining the park, if you own the actual mobile homes you will be having to do a ton of maintenance and lets be honest many mobile home owners aren’t the taking care of shit kind of people and mobile homes do not have the usable lifespan of a regular home. – NeverNeverLandIsNow added.
- I own a mobile home out right and it cash flows like crazy. We’re getting $700/month and bought it for like…$4k. Yes, they don’t appreciate. In fact, they depreciate, very quickly. But who cares? If you’re looking for appreciation, buy a home on a foundation. I don’t see any huge issues with your plan. Just set money aside for maintenance, pick some good tenants, and you’ll be set. – brycematheson concluded.
Possible Advantages Associated with Mobile Home Rentals
Buying mobile homes may provide investors with several possible advantages, including the following:
The fact that mobile homes are often more reasonably priced than traditional single-family houses makes them an investment option that many more individuals are in a position to take advantage of. They are also easier and less expensive to operate and repair, which may reduce your overall operating expenses.
Because mobile homes may be moved to new sites as necessary, you can place them in various settings according to the market’s requirements. This might help you increase the revenue from your rental property and decrease the costs associated with it.
Higher Rent-to-Value Ratio
In comparison to regular residences, mobile homes often have a higher rent-to-value ratio, which indicates that you have the potential to make a greater return on your investment. This may be particularly the case in areas with a considerable demand for housing within accessible price ranges.
Possible Drawbacks Associated with Mobile Home Rentals
Nevertheless, it is essential to have an awareness of the possible negatives of investing in mobile homes, which may include the following:
Mobile homes, often much smaller than regular houses, may not have sufficient space for bigger families or those who want a great deal of room for storage.
Keeping up with the maintenance of a mobile home may be difficult since these homes are sometimes situated in parks or communities that have shared amenities that also need upkeep. Renters could also be responsible for their own maintenance and repairs, which can add up to significant expenses.
Value After Purchase
The resale value of a mobile home is often lower than that of a traditional house, which might make buying a mobile home a less appealing choice for those interested in creating a financial investment in real estate. In addition, it may be challenging to find a buyer for a mobile home, mainly if the property is situated in an area that is not very popular.
Creating a Profitable Mobile Home Rental Business
If you proceed with caution and forethought, renting mobile homes may still be a lucrative investment option, even though there is a possibility that you will encounter some challenges. The following advice will assist you in maximizing your revenues as much as possible:
Conduct Market Research
To establish the need for reasonably priced housing and the availability of mobile homes, you should conduct market research on the local market. This information may assist you in determining the most advantageous sites to position your mobile homes and the most advantageous rental prices to provide them.
Conduct Regular Maintenance
Maintenance and repairs keeping your mobile homes in excellent condition through routine maintenance will help decrease the need for extensive repairs in the future. Maintaining a high occupancy rate and increasing your rental revenue may be accomplished with this strategy.
Perform a Thorough Background Check on Tenants
It is essential to do a comprehensive background check on your renters in order to ensure that they are reliable and will pay their rent in a timely manner. This has the potential to aid in minimizing the turnover rate of renters, which in turn may assist in increasing the income from your rentals.
Consider Making Renovations
You should think about improving your mobile homes if you want to increase the quality of your tenants and the amount of money you make from renting them out. You may, for instance, upgrade the kitchen equipment or the flooring.
Renting out mobile homes could be a smart way to make some money if you’re careful and have a solid game plan. Sure, there might be some bumps in the road, but the upsides can make it worthwhile.
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Hi, I’m Ashley a freelance writer who’s passionate about personal finance. Ever since I was young, I’ve been fascinated by the power of money and how it can shape our lives. I’ve spent years learning everything I can about budgeting, saving, investing and retirement planning. So if you are looking for tips, advice, or just a little bit of inspiration to help you on your financial journey, you have come to the right place. I am always here to help, and I am excited to share my passion for personal finance with you.