Does
myth that mobile homes depreciate in value keep you from investing in them? Well, they do lose value in a park, on a rented lot. Mobile homes with real estate, however, are an entirely different investment. My mobile home doubled in value in twelve years I lived in it. The home deteriorated a little (don't all houses?), but value of land continued to rise. Also, by renting rooms, I took in far more money from my home than it originally cost, and I was living in it!
Forget your prejudices and look at numbers. In this town, for example, a two bedroom house rents for $800/month, and costs about $120,000. A mobile home gets $500/month, but you can buy one on real estate for $50,000 or less. The cash-on-cash return on investment is obviously higher with mobile homes.
What about long term return from appreciation? House rentals here typically have negative cash flow, while mobile home rentals at least break even. Investors prefer houses anyhow, believing they'll build equity faster, but is that true?
Faster Equity With Mobile Homes
Buy a house for $120,00. Put $20,000 down, and you'll have a $100,000 mortgage loan. Amortised over 30 years at 6% interest, you'll have a payment of $599.60. Of 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 moment.
Second scenario: Find a nice mobile home for sale, and borrow only $30,000, at 8% interest, amortised over 10 years. Note higher interest - this is always case with "factory built home mortgages." The shorter term is normal too, so you'll be done with payments in 10 years instead of 30.
Now, despite higher interest and a shorter term, payment will be only $363.99. The first month, $200 will go towards interest. That means other $163.99 goes towards principal. You bought more house (built more equity) in this scenario.
A mobile home on land might appreciate more slowly than "regular" house, but faster loan pay-down covers this factor. 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 licensing requirements.
