There are mobile homes for sale, for much less than stick-built houses, in most
areas of the country. Despite persistent predjudice against them, mobile homes
are the cheap housing choice of millions. The advantages are not always obvious,
but they are real.
First of all, the big "truth" about mobile homes and
depreciation is only half true. Mobile homes in parks generally go down in value
over time. Mobile homes on land usually go up in value.
I don't
recommend buying in a park, unless you can't buy real estate, and you've done
the math to see if you are better off than renting an apartment. 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
Mobile homes for
sale on land, however, are an entirely different investment. My mobile home
doubled in value in the twelve years I lived in it. 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 rented rooms, and took in more money from my home than it
originally cost.
Since mobile homes sell for less than other houses, the
mortgage payments are lower. Also, because of the shortened amortization and
lower loan amount, you'll 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
Buy a house with a
$100,000 mortgage loan amortised over 30 years at 6% interest, and 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, so you'll own your home
free-and-clear in 10 years instead of 30. Despite higher interest and a shorter
term, the payment will be only $363.99. The first month, $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 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 cheap to maintain. Years ago I had a mobile home as a
rental, and the furnace died, the most expensive repair you'll have in a mobile.
I replaced it for $1,200, but that was still much 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, instead of $5,000 to re-shingle a traditional roof. Windows,
plumbing, doors - they're all cheaper.
Property taxes cost less, because
they're based on value, and mobile homes have a lower value than stick-built
houses. Insurance will cost less too, 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).
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. |
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