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: http://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.
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, www.HousesUnderFiftyThousand.com
