I Want to Live in a Double Wide Trailer!!!

Well, I don't. Not really. Although owning a park filled with manufactured homes, the PC description of trailers, may not be a bad investment.

On the surface, this may seem like a bad idea. A really bad idea. Manufactured homes are seen as down-market, their value depreciates more quickly than regular houses, and most local governments will try to prevent a new trailer park from opening.

Lonnie Scruggs disagrees. He has made his living owning mobile home parks.

There will always be a market for affordable housing. In more rural areas, there are few apartment buildings and renting a regular house is inevitably more expensive than renting a manufactured one. Let's face it, some people just aren't interested in creating wealth, and are happy paying rent for the rest of their lives. So... that double wide sitting in your mobile home park can be seen as a ticket to grow your money, just like any other real estate investment.

The manufactured home business saw the credit crunch a lot sooner than the rest of the housing market, as banks refused to lend money for people to buy them. But then, banks had previously been lending nearly 100% of the purchase price for new mobile homes that depreciated to a point that buyers were paying much more for them than they were worth, just like in many real estate markets around the United States... and the world.

The secret is finding an already existing park, and then buying the land outright. Some parks rent out mobile homes. Many have owners living in them. Most are a combination of owners and renters. But even if someone owns their manufactured home, they don't own the land in the park, so have to pay rent on it.

So... what about financing? These days traditional loans are nearly impossible to get, even with good credit. There are ways around this, however, even in the current economy. The secret is owner financing. It's not much of a secret, really, but it does require additional negotiating, which you can do through a real estate agent if you feel your negotiating skills are not up to par. You would have to find someone who owns a trailer park, and who is tired of running it. Perhaps they are ready to retire, or perhaps there are changes to their financial position that mean they are eager to sell. Then, you negotiate terms with the owner, based on what price they want and their and your own unique positions.

Owner financing is not just something that can be used for manufactured homes, either. It is something that can be used for any real estate venture, and may become more common unless banks loosen their credit.

But back to reasons why owning a mobile home park is a good investment opportunity. Firstly, for the reasons I mentioned, you're not likely to get a whole lot of competition when looking around to buy a trailer park, as it is seen as inglorious. This is a good thing, though, as it lessens competition. Next, by owning a mobile home park, the government is likely to be on your side, making it difficult for others to start new, competing parks.

Just one thing to remember. Do not buy a manufactured home NEW! Mobile homes depreciate VERY quickly, and buying new ones are bad investments. But you can certainly make money by renting them out.

(Originally published at The Creating Wealth Blog on 2/4/09)