Are mobile homes a good investment? (why not)

By Elaine Knight
Page last updated: 01/07/2021 | Next review date: 01/07/2023
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Elaine Knight
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In this blog post, we will discuss: Are mobile homes a good investment? We will expose the pros and cons of investing in a mobile home, and give arguments why we believe investing in such a property is not a good idea. 

Are mobile homes a good investment?

Mobile homes can seem like a good investment as there are several advantages:

  1. First of all, buying or renting a mobile home is inexpensive. 
  1. Second, an attractive tax system. By buying a mobile home, you are not subject to property tax or housing tax. The only tax you will have to pay is the tourist tax (between 100 and 200 $ per year).
  1. Furthermore, as a reminder, a mobile home is movable property (and not real estate), so there are no notary fees.

Still, traditional houses are always a good investment in the medium and long term, it is always possible to recover the investment and obtain an additional benefit no matter how retracted the market is at that time. The real estate market always manages to stabilize favourably, and the investment of the property will generate profits or represent valuable capital for the family. 

Mobile homes also enter this market game with ups and downs, with the great difference that mobile homes or also known as trailers, never represent a capital gain, in the short, medium or long term. In this sense, it is NOT a good idea to buy a mobile home. You will always lose part of your investment money.

Here we explain why it is not a good idea to buy a mobile home.

How much does a mobile home or trailer cost?

The value or price of a mobile home (trailer) or a traditional home is slightly similar in some cases when we compare the value of a BRAND NEW Mobile Home with that of a house. 

The big difference between a traditional house and a trailer is the value that the property will have over time, in other words, the capital gain of the property. We can run a quick example to understand a little more about what will happen to your investment, whether you buy a house or buy a mobile home.

We can say that the value of a traditional house increases from $10,000.00 to $20,000.00 per year approximately or much more, whereas mobile homes tend to lose a value of $ 3,500.00 to $ 5,000.00 or more per year approximately, which means that the difference in money that could be gained or lost in the medium and long term is significant. That being said, the equity on your investment is on one side only when investing in a property.

As much as you do remodelling, or have the best mobile home location, it is difficult to make a good profit when you decide to sell it. If you want to have an asset that represents future stability for you and your family, consider not investing in a trailer.

Advantages and disadvantages of buying a mobile home 

Let’s look at the advantages and disadvantages of buying a mobile home, and why it is not a good idea to put your effort and money into this option.

  • The only advantage, where it might make any sense to buy a mobile home, is if the trailer is bought at a very low price than the current value of a similar mobile home in your state, with the sole purpose of living very cheaply and having enough savings and economic stability to later buy a traditional house, which would be the indicated option that increases its value in the medium and long term.
  • Disadvantages of buying mobile homes:
  • They are not properly prepared like traditional houses to withstand aggressive weather events
  • Its manufacture is much less durable. In addition to this, they may need expensive, continuous and repetitive maintenance.
  • They lose value quickly, you can lose between $ 3,500.00 to $ 5,000.00 per year
  • Mobile homes are more prone to damage
  • Payment of rent for the land where the mobile home is located, in some cases, the payment is similar to the payment of rent for a small apartment. You will never stop paying for the land and it will not be yours at some point either
  • It will be difficult to find a bank or lender who wants to finance your purchase
  • A traditional house is your best investment.

How much does it cost to invest in a mobile home?

Interested in investing in a mobile home? Here are some figures:

  1. Take a second-hand mobile home (5 years old) with 3 bedrooms, which you equip in “high-end” standing, installed in a 4-star campsite.
  1. You rent your plot for around $4,000 per year.
  1. This mobile home was bought for $25,000. You recover 20% VAT on this purchase, i.e. $5,000, so your mobile home costs $20,000.
  1. By starting from $2,500 in profits per year, you have reimbursed your mobile home in 8 years ($2,500 * 8 = $20,000).

To compensate for the inevitable hazards, and the few refreshments necessary, a few thousand dollars are subtracted, which gives between $10,000 and $15,000 in potential profits over the duration of the operation.

Final recommendations for buying a mobile home

Mobile homes have become more and more popular, becoming a tangible option when deciding the type of home to be purchased, since the advantages they offer are various, such as a reduction in costs and construction time. 

But there are some things that we must consider prior to acquiring a home of this type. Like any important decision to make, you have to consider all the angles and possibilities, to obtain an optimal result. 

Please feel free to let us know what you think about investing in a mobile home, or if you have any questions about the content. 

FAQ on Are mobile homes a good investment?

What does it take to buy a mobile home?

To buy a mobile home you must obtain a state-registered license plate or mobile home permit. Once you have the valid registration when paying the established amount. We recommend obtaining the title to the mobile home in case you want to sell it later.

What are mobile homes?

Mobile homes are prefabricated homes that can be relocated without having to dismantle them, that is, you can move them from one place to another with the help of a trailer.

Is it good to buy a mobile home?

The advantage of investing in a mobile home is that you can buy for a relatively small amount compared to real estate in general. Indeed, it is possible to buy a second-hand model for $12,000, the price of a small car!

What is the difference between a bungalow and a mobile home?

The difference between a mobile home and a bungalow is the structure of the facades. The bungalow is in waterproof canvas while the mobile home is in insulated PVC panels.

References

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