Why I Enjoy Mobile Home Investing
When most folks hear the word “mobile home,” images from the film “8 Mile” and negative stereotypes of mobile home dwellers enter their minds. These images can be misleading – it’s not always the case.
Just like there are different types of neighborhoods in real estate, there are different types of neighborhoods in the mobile home world. Even with the title of this article, you’re probably wondering how the word “mobile home” can even be in the same sentence as the word “enjoy?”
Hi, I’m Rachel (aka “Mobile Home Gurl“). I specialize in mobile home investing. I’m here to tell you about how I came across this small little niche of investing and why I enjoy it so much.
When I first started my real estate investing career, I thought my path to financial freedom would be by building wealth through single family homes and apartment buildings. As a landlord, I found out the hard way that I was going down a path that led me further and further away from my dream of achieving total financial freedom. How could this be?
As a property owner, I felt that I had a job. Every month, there would always be issues with tenants. And, every year it seemed like my expenses would go up (i.e. maintenance costs, property taxes, etc). Even worse, every time I added a new property to my portfolio it seemed like it would make things worse by causing more work. To me, it was just a new property to manage.
Now, most people would be ecstatic to add new properties to their portfolios. Though, I did not see it that way.
I saw it as another hassle to deal with.
It was the management of these properties that really made things difficult. Even when I got fed up with all the management hassles, I brought in property management companies. I thought they could help make things go away – I was wrong.
It only got worse because I still had a job –I still had to manage the property managers.I had to teach and direct people what I already knew. Every time my phone would ring, I would cringe as I knew there was another problem.
Don’t get me wrong, it’s nice to own properties and derive income from it. But, for me the key to achieving total financial freedom was through passive income. And, I just felt the income that I was receiving as a landlord was not passive – I still had to work for it.
There was no way I could go on vacation and leave the business – it just was not possible. I remember taking a trip one time, my phone constantly ringing as my property managers were dealing with maintenance issues. And, I was in another country. Not fun at all.
It wasn’t until I stumbled upon Lonnie Scruggs (many times referred to as the “Godfather of Mobile Home Investing”) and his book, “Deal on Wheels,” that I truly understood the meaning of financial freedom through passive income.
You see, what I’ve learned from Lonnie is that the real key to financial freedom lies in the concept of financing – not through ownership. Now, I truly understand the saying “The rich control while the middle class own.”
In a nut shell, the concept of financing through mobile home investing involves buying a mobile home at wholesale value and selling it retail through financing by offering terms. It all boils down to creating an easy way for folks to buy a home with a small down payment and small monthly payments charged with interest over a period of time.
If you think about it, this concept can be applied to anything – not just mobile homes. As consumers, we buy a lot of big ticket items on credit including cars, boats, houses, etc. This is nothing new – this has been done for centuries by banks. What Lonnie did was take this concept and apply it to mobile homes. Therefore, creating a niche – mobile home investing.
I have come to realize that it’s much better to be the bank. As a prior landlord, I know now who always gets paid – the bank. When expenses go up, who still gets paid? The bank. When vacancies arise, who still gets paid? The bank. When evictions occur, who still gets paid? The bank. Is it better to be a property owner or the bank? I’ll let you decide.
For me, I made the decision years ago that it was better to be the bank. And, that decision has paid off. Now, I can enjoy true passive income through mobile home investing. And, I can honestly say – this has been my chosen path to financial freedom.
The concept of mobile home investing is very simple. It also allows investors to get in with a very small amount of money compared to other forms of real estate investing such as single family homes and apartment buildings.
My First Mobile Home Deal
To give you an idea on the mechanics of a mobile home deal, here’s an example of my most important deal – my first deal. It was a 1984, 2 bedroom 1 bath mobile home in a family style mobile home park. I bought the home for $3600 and sold it with owner financing on terms for $10,000. The buyers paid $1000 down with payments of $250 per month for 4.5 years.
Since I received $1000 (the buyers down payment) plus $3000 ($250 per month multiply by 12 months) to equal a total of $4000 in my first year, I received 100% of my investment in the first year. Plus, I had no maintenance issues to deal with since I sold the home on owner financing.
Not only did I receive a great return on my investment, but the payments I receive are truly passive. No longer am I the one responsible for taking care of the home. No longer do I have to deal with the constant issues of being a landlord. As the bank, my job is merely to collect payments and get paid. If you think about it, when was the last time you called your bank when the toilet went out? Never.
So, you see the reason why I enjoy mobile home investing is because it’s a vehicle for me to truly create passive income. And, that is why it has been my chosen path to financial freedom.
If you’re interested in the concept of passive income in achieving financial freedom, you might just want to give mobile home investing a look. For those who are just getting started, I highly recommend checking out Lonnie Scruggs’ book, “Deals on Wheels” – it’s been the best investment I’ve ever made.
Rachel Hernandez was a prior landlord for several years before taking the leap to specialize in mobile home investing. She writes regularly about her stories and adventures investing in mobile homes at: http://www.adventuresinmobilehomes.com.
Published on May 18th, 2010