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Why Look At Mobile Homes For Sale?

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,

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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