There are mobile homes for sale, for much less than
stick-built houses, in most areas of the country. Despite
the persistent predjudice against them, and sometimes
against their residents, mobile homes are the cheap housing
choice of millions. The advantages are not always obvious,
but they are real.
First of all, let's acknowledge the big "truth" about mobile
homes and appreciation or depreciation. It is true in most
areas that mobile homes in parks go down in value over time.
That's why I don't recommend buying in a park, unless you
absolutely can't buy real estate,
and you have done
the math to see if you are better off than renting a nice
apartment. To "do the math" consider lot rent, payment, and
the remaining value of the mobile when you put it up for
sale, minus what you will still owe,
when you are
likely to move. These are guesses, but still better than
nothing if you are as objective as you can be.
Mobile Homes For Sale With Real Estate
When looking at mobile homes for sale on land, however, you
are looking at an entirely different investment. My mobile
home in Michigan doubled in value in the twelve years I
lived in it. That's because even as the home deteriorated a
little over time (don't all houses?), the value of the land
continued to rise. You also can do what you like with the
home when you own the land. For example, I took in more
money from my home than it originally cost, by renting out a
room or two over the years.
As mentioned, mobile homes usually sell for much less than
other houses, and this means not lower payments. Also,
because of the shortened amortization and lower loan amount,
you will often build equity faster in a mobile home than in
a more expensive house. A quick example follows, for the
skeptical among you.
Equity Building With Mobile Homes
If you buy a house with a $100,000 mortgage loan amortised
over 30 years at 6% interest, you'll have a payment of
$599.60. Of the first payment, $500 will go towards
interest, $99.60 towards principal. In other words, you only
built equity of $99.60 (I'm ignoring appreciation, but only
for the moment).
Second scenario: Find a nice mobile home for sale, and
borrow only $30,000, at 8% interest, amortised over 10
years. Note the higher interest - this is always the case
with "factory built home mortgages." The shorter term is
normal too, but least you'll own your home free-and-clear in
10 years instead of 30. Despite the higher interest and
shorter term, the payment will be only $363.99, the first
month only $200 will go towards interest. That means the
other $163.99 goes towards principal. You bought more house
(built more equity) in this scenario.
It's true that a mobile home on land
might appreciate
more slowly than a "regular" house, but the faster loan
pay-down probably more than covers this factor. If you also
chose to bank the difference in payments ($235.61 per
month), you'd definitely be better off financially with the
mobile home versus the more expensive home.
Pay less per month and build more equity! Don't expect your
real estate agent to tell you this. Don't expect him to even
agree with me after you explain it. I sold real estate years
ago, and math skills were not part of the licensing
requirements.
Mobile Homes For Sale; Other Advantages
Mobile homes are cheaper to maintain. Years ago I had a
mobile home as a rental, and the furnace in it died. This is
the most expensive repair you'll have in a mobile. I had to
replace it for $1,200, but that was still less than a
furnace for a larger home. Consider that for $200 you can
tar the roof of your home, or $30 if you do it yourself,
instead of $5,000 to re-shingle a traditional roof. The
windows, plumbing, doors - all cheaper.
Property taxes will cost less, because they're based on the
value of the property, and mobile homes for sale on land
have lower value than stick-built houses. Insurance may cost
less too, again because you are insuring less value. The
only precaution to remember here is to be sure you can get
insurance. Very old mobiles may be uninsurable in some
areas.
Should You Buy A Mobile Home?
Don't buy a mobile home if prices for houses in the area are
just as low. Believe it or not, this is the case in some
areas. We bought a house near Butte, Montana for $17,500 -
less than mobile homes for sale there (See a photo on our
site
www.HousesUnderFiftyThousand.com. Houses
do generally hold up better. Then there are the issues of
whether your own needs and predjudices will let you be
comfortable in a mobile home. They are sometimes for sale in
areas you don't want to live in (Certainly true of houses as
well). These are personal things you have to consider.
The advantages are clear for many young people starting out.
It may be their only option. It may be
your better
option. Besides a lower initial price, you get simpler,
cheaper maintainance, lower monthly payments, less property
tax, less for insurance, and faster equity build-up. So
don't automatically pass on those mobile homes for sale when
you're out home-hunting.
About the Author
Steve Gillman and his wife Ana have converted their mobile
home in Michigan to a rental and moved to Tucson, Arizona.
He and his wife also lived for a while in Montana, where
they bought a beautiful house (not a mobile) for $17,500.
That experience lead to the creation of their website,
http://www.HousesUnderFiftyThousand.com