While Young Wealth has been of the opinion for a long time that single family residential housing is the best investment around, hands down, don’t forget that the definition of single family housing also includes mobile homes. In fact, mobile homes might provide better cash flow, dollar for dollar, than a traditional house-on-a-foundation structure.
Let’s put some numbers to the idea by comparing the income stream from a single $200,000 home against the stream generated if you owned 40 separate $5,000 mobile homes. The single family home rents for about $1,000, which is nothing to sneeze at, but each one of the mobile homes (two bedroom, single wide) should bring in about $500 each. Add them all up and you’ve got $20,000 coming in each month.
That’s $20,000 compared to $1,000! All other things being equal, we’re pretty sure we’d take the $20,000. Of course, all other things are rarely equal. It’s true that a single family home not only looks better (usually) than a mobile home but is likely to last a heck of a lot longer also.
While the rental market is on fire right now for landlords, with demand exceeding supply, there’s always the chance that you’ll have a vacancy. When you own 40 mobile homes, one empty unit doesn’t cause undue concern. Looking at the flip side, though, an empty rental home when you only have one is disastrous.
So how are you going to lay your hands on enough mobile homes to make this investing approach work? Simply put – buy a trailer park, or multiple trailer parks if you can afford it. A smaller 8 to 15 unit park can usually be found for under $200,000.
Earlier we mentioned that the life span of a traditional single family home will likely outlast a mobile home. That’s no big deal when you consider you’re earning $500 a month for a mobile home purchased for $5,000. It only has to survive 10 months and you’ve earned your investment
cost back, and unless you bought a real piece of junk or have the bad luck to rent to a family of homemade meth manufacturers, the place is liable to last MUCH longer than that.
The Young Wealth Team
Flickr / Liz Henry