Flipping mobile homes can be lucrative and tricky. Learn why.
The Slippery Slope of Mobile Home Flipping
Flipping is the purchase of a property that, in many cases, needs some work, you improve the property, and then sell it for a profit. In reality, the flipping of a property can be very successful or be very dangerous, so you have to be careful. However, flipping mobile homes is a bit different. When you turn these properties, there is a little more complication because they are so affordable. It can skew the profit margin for the inexperienced since the price per square footage in a manufactured home can cost half that of a traditional home.
You May Need Less Money
Flipping mobile homes can be an attractive business opportunity, especially if someone is handy, and they live in a populated area. Mobile homes are almost always much cheaper than houses, which means that mobile homes have a lower bar than with traditional homes. This doesn’t mean the investment strategy is risk-free, though. Like flipping houses, there are some challenges and potential pitfalls that come with flipping mobile homes. Walking a fine line between updating the structure and not outpricing the market is required in flipping mobile homes, meaning investors willing to rehab and flip mobile homes must learn how to perform real estate market analysis.
Consider the Cost Before You Start
Also, some forethoughts are required in flipping a mobile home. Investors need to understand the return on investment, in addition to knowing the trends in the housing market field, to avoid any loss. Some mobile homes may need a cosmetic makeover; some updating the major surfaces will give a high return on investment (ROI). But one must take note that if a mobile home comes with too many structural issues (assuming it is on a permanent foundation), it isn’t worth investing in.
Flipping Mobile Homes or Traditional Homes?
It is vital to note a few things; most individuals who had no issue flipping a traditional home shouldn’t have a problem when flipping mobile homes. Nevertheless, most investors consider having a budget since most mobile homes are relatively inexpensive. Still, most investors must realize there is a lot to know when working with mobile homes. For example, what are the benefits of selling a floppy mobile home even with upgrades, what are the best locations for mobile home flipping, have an understanding of who will buy the property once complete. Other essential questions are where do I get the money for acquiring and rehabbing such properties, or how do I sell it on the open market.
A perfect instance is a mobile home that cost an investor $40,000 total might end up selling for $65,000, netting the investor a $15,000 profit. It’s better to have a conservative sales figure when setting for a budget, especially with mobile homes. This way, the number of the lowest amount of money for which a mobile house can sell will result in a profit for the investor.
Mobile Home Considerations
The client base is a major problem faced with flipping mobile homes. Most clients don’t have the capital, meaning the investor will have to do owner financing. Moreover, community owners place restrictions on renting home in their community. Sometimes the reward, after all, is too low to warrant the effort. Therefore, to handle this type of demand, investors need to know the market very well. Also, some mobiles are not well maintained, tenants complain, and abuse and the mobile homes themselves are not usually well built.
Mobile Home Buyers
Flipping can be a tricky course for inexperienced investors. But apart from this, flipping mobile homes require less money as an investment, the finished product always sells like a traditional house, and those people who can’t obtain a considerable mortgage are those that continue to look for a cheap standard of living to provide ideal market potential.