Flipping mobile homes is a good investment option, but new investors have no idea about the potential it carries. Mobile homes are economical as compared to traditional homes, and flipping them is easier and quicker. However, for new investors, it can be a risky option. This article can help you understand why flipping mobile homes is a great investment and the challenges related to it.
Why flipping mobile homes are a good investment?
Flipping mobile homes is a quick way to make money. You can buy a mobile home at a low price and sell it after renovation. It can earn you a good net profit. Some advantages of flipping these homes are discussed below.
The required investment is low: when we talk about the price of single-family units and mobile homes, a mobile home is half the price of a family unit. So you can flip a mobile home even if you have less money to invest. If you have money, you can buy more than one house and sell them for better returns.
High demand for mobile homes: Everyone wants a house, and single-family units are expensive. It makes mobile homes very attractive and affordable. If you have a mobile home, you can get a buyer very quickly. However, you have to fix the price carefully keep a decent profit margin, but the price should be attractive for the buyers.
Good return on investment: You can buy a mobile home, and as these homes are smaller, the renovation is not very expensive. So, when you make them attractive and better than other homes, you can get a good return on your investment. You can buy all the homes in the park and make it more attractive for the buyers and tenants.
Challenges related to flipping mobile homes
Mobile homes are different from traditional units, which makes property investors hesitant about their buying and selling. However, if you plan to invest in these homes, you may have to face some challenges. Here we are discussing some major ones.
Low Market value: Mobile homes can be compared to automobiles when it comes to market value. It reduces with time, as mobile homes are not considered real property, but they come under personal property. Land and things attached to it are called real property, while the personal property can be detached from the land without any damage. Permanent installation and proper maintenance can enhance the market value of these homes. The age of the homes, inflation rate, and neighborhood also affect the price of a house.
Limitation for renovation: Some homes have HUD tags while others are without them. This tag shows that the home is manufactured according to safety standards. You can paint the interior and exterior of these houses, renovate the floor and install new light fixtures. However, they cannot be renovated like real homes. If renovation involves moving walls, you may have to do the wiring and plumbing again, needing more money.
Undesirable location: If the home is at a good location, the demand for the house will be high. You can get a good return for your investment, and if you want tenants, they will be ready to pay good rent. However, if the home is away from necessities like grocery stores and public transport, it will be difficult for you to sell it at a good price. The neighborhood is also very important. No one wants to move if the area is known for high crime rates.
Steps to Flip Mobile Homes
Flipping mobile homes is explained here in some easy steps
Fix your budget: You have to fix a budget to buy a mobile home. First, you have to allocate a budget range from minimum to maximum amount. The amount you are ready to invest will determine your expectations from the flipping project.
Find a good location: Find a location that has a reselling potential. Think like a resident at this point. Buy a house if you want to live at that location. It must have a low crime rate, access to transport and shopping places.
Do analysis: You need to do a bit of property analysis as well. Analysis of your chosen location and think about the profit you want to make. Consider different aspects and see if the house can fulfill your expectations.
Find a home with resale potential: Now, you have to search the house according to your budget and preferred location. Narrow down your choices according to the earning potential of the houses. A foreclosed house can be a good choice.
Inspect the house: When you find a house according to your requirements, you must estimate the repair cost. You can hire a contractor for this purpose if you are new to this business.
Negotiate price: After estimating the repairing cost, you can negotiate the price of the house. Explain to the seller about the money you must spend on repair, and most sellers understand such issues.
Do renovations: You can do it yourself or hire a contractor for renovation and repair. If you will do it yourself, it will save money but will be time taking. So, decide according to your budget. Experienced investors hire contractors to save their time.
Fix the house price: To fix the price of the house, you have to add all your expenses and the profit you want to make. Make sure the price is matched with the market. If you want t use it as a rental unit, you can calculate the rental price according to the market.
Sell or rent out your house: You can list your house on different websites and local papers. Taking some good pictures and a nice description will make it attractive for buyers and tenants. Add all the necessary details in the advertisement to avoid unnecessary inquires.
Enjoy the profit: Now it’s the time to enjoy the profit. Plan a good strategy to earn well in the end. For example, if you rent out your home, the profit will come slowly as monthly installments, and if you sell it at a good price, you can invest the money in the next house.