What Is My Mobile / Manufactured Home Worth?
Posted: Friday, January 15, 2010
by Rhiannon Wilkinson
My name is Rhiannon (Rose) Wilkinson, and I am a full time real estate investor.
A common misconception people make when buying a property is listening to what a Realtor tells them that it is worth instead of relying on statistics and a little bit of common sense.
To find out the value of the property, find out what properties in the area that are similar to the one you are buying are RENTING for.
And the reason I am asking you to look at the rental rates is because if worse comes to worst and you cannot RE-SELL the property, you will be forced to rent it someday. And if your mortgage or monthly payment ends up being more than what the area rents command, then guess what? You are going to have to come OUT OF POCKET with negative cash flow, or go into foreclosure.
None of those two options are the least bit fun, I can assure you.
So, how do you determine what to offer on the property?
Well, it depends. If you are FORCED to rent it out someday in the future, do you want to make a 10% return? 20% return? 50 percent return?
Also, there is the factor that mobile homes always DEPRECIATE in value, like a car.
Do you own the land that the mobile home will be on, or will you have to pay lot rent?
That is another determining factor to figuring out what it's "worth"
The reason why you want to ask yourself these questions is because "worth" is only determined by what other people end up buying it for in the future.
If I bought a brand new Ferrarri and drove it off the lot, it would depreciate by 20% if I listed it on Craigslist the next day, because why would a person give me what I paid for it if they can go drive a brand new car off the lot themselves?
Real estate is different if you are talking about a frame or brick house. Mobile homes can hold value if you own the LAND under them, and not have to pay lot rent.
Otherwise, figure out what your payment on the mobile home will be, what your lot rent will be and figure out what other mobile homes with lot rent are RENTING for.
If you are satisifed with breaking even and at least getting your mobile home payment and lot rent covered if you can't sell and are forced to move - then at least you know you can rent it for what your payment is, and not ruin your credit.
If you can negotiate to where you can buy the mobile home super cheap, and your payments on that plus your lot rent payment are a little bit LESS than what the area rental rates are - then guess what? If you are FORCED to rent out the property due to not being able to sell it - you will make you a little bit of profit every single month.
I am not saying you will ever want to rent it or sell it, for that matter. But when buying something, ALWAYS prepare for the worst case senario.
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