Buy Mobile Home Or Cheap House?
I аm wondering whісh wουƖԁ bе thе better investment:
Bυу a mobile home аnԁ pay rent іn a mobile home park fοr several years аnԁ thеn sell thе home tο υѕе аѕ a down payment fοr a bіɡɡеr house
OR
Bυу a small, cheap house fοr thе same amount аѕ payments οn thе mobile home + lot rent іn thе park wουƖԁ bе
I've heard thаt mobile homes depreciate very quickly, bυt I don't know thаt thе quality οf home I сουƖԁ afford fοr a regular house wουƖԁ bе thаt ɡrеаt. I wουƖԁ bе looking аt аn $80,000 οr less house.
Anyone hаνе аnу thουɡhtѕ οn thіѕ?
HOUSE.
Mobile homes depreciate as fast as automobiles. What happens a few years down the line when you can’t move the mobile for a fair price?
home only unless paying cash. The fact is very few lenders will lend on mobile homes and after that when in a park that cuts the list way down and the rate goes way up since it is not titled as real estate but chattel. Home on site should go up in value in a normal market
House. Its more likely to maintain its value and appreciate.even if it is a cheap one.
Hello,
Your questions is great and but you need to answer a few questions as well for a more detailed answer. I will try my best to answer your questions.
Both a mobile home and traditional single family house (SFH) are good investments… depending on location.
95% of mobile homes do not move off their land (pad).
The lifespan of mobile homes vs. SFH is much the same, however it can be argued that the workmanship of mobile homes is more consistent in the quality than SFH for two reasons. The majority of mobile homes are made in factory. The amount of factories in BC are very few.
The manufacturing efficiencies of mobile homes are greater and those cost savings are passed to the consumer.
Pad Rent vs Ownership
The price of real estate has more than doubled in most areas of BC in recent years. Which has increased greater? That depends on a number of factors and the biggest factors would be…
Location and purchase price
With $80,000 worth of equity and loan combination, the location will be restricted for SFH in rural northern locations (I presume). The equity increase in rural northern areas is less than municipal areas especially in the southern and major cities of BC.
Therefore, as an investment I would pick the best location with a loan to value ratio that you can withstand an increase in interest rates in the next five years.
The average Mobile home from the 1960’s -80’s has more than doubled in value and I would say close to tripled if you bought in a aesthetically pleasant park in the last 5-10 years. They were available for $20-30,000.
Operating Costs:
An important factor of investing in real estate is the cost of maintaining the SFH or mobile home. Lets briefly compare.
SFH:
Property Taxes: land value and home, utility taxes.
Maintenance: landscaping (cutting grass, etc), garden, roof, updating/renovating, etc.
Utilities: water/sewer or septic
Purchase property Transfer Tax: 2-3% of purchase value.
Mobile Home:
Property Taxes: home and utility taxes. -No land taxes
Maintenance: garden, roof, -Park owners pay for landscaping,
updating/renovating, etc.
Utilities: Park owners pay for water/sewer or septic
Purchase property Transfer Tax: 2-3% of purchase value.
Therefore, the operating costs are much cheaper living in a mobile home park than SFH. However the pad rent should balance the costs to be equal.
it is my conclusion that both are quality investments. Canada is slow to jump on the band wagon of Mobile Homes compared to the US. This can also be argued that Mobile Home Park zoning has been restricted in municipalities because the property taxes are cheaper, thus the city wants greater revenue and encourages SFH zoning.
Get informed before you buy. I would recommend Location, Location, Location and purchase price. Both increase in value over time, so pick a good location in a park. Buy a home that needs fixing up if you are young (or young a heart) and have time to learn.
Lenders… The majority of banks and credit unions lend to mobile home owners. usually 5% down with a good credit rating. In the past banks were difficult to deal with, but new legislation has made the lending practices easier for both parties.
Good luck!!