LowCost, High Cash Flow Investing
Posted by Peter Vekselman Monday, 2 July 2012 05:18 No Comments
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Mobile homes make a great investment for beginning or any smart investor. The mobile home market is mostly unrecognized for its cash flow in today’s tight home rental market. If you want to be a landlord, now is a great time to play “let’s make a deal” with mobile home sellers.
When the traditional single-family house market is suffering from few buyers and exceptionally low prices, imagine what is going on in the mobile home market on rented dirt. Almost nothing. Trying to sell a mobile home in a trailer park right now is futile. So, you can imagine that prices are ultra low.
As an investor, think about this. People need somewhere to live. For most, it means owning a house – something that fewer and fewer are able to achieve. After that, it means renting a single-family house. More and more are doing this. For those not able to rent a house, apartment living typically becomes the next option. Investing in multifamily apartment buildings is a great way to invest in real estate today. However, it is also an expensive investment because most investors see that rents are going up and vacancies are going down.
What only the most savvy investors see is that mobile homes on rented dirt fill a need in-between rented houses and apartment living. What’s the big reason people prefer rental houses over apartment living? The fact that they have a yard for the kids to play in and a garage. No shared walls. More independence.
Let’s say the typical three-bedroom house in your town rents for $1,095 and a two-bedroom apartment goes for $750. Typical numbers across the country. Now, consider the three-bedroom mobile home that rents for $500 with the added cost of renting the dirt for another $250. Total cost is $750, the same as a two-bedroom apartment. Mobile homes are not the same as a house but better than an apartment. No shared walls, a small yard, and a carport for the same cost as an apartment.
With that in mind, you need to crunch the numbers. You can buy an older but decent doublewide for about $5,000 in most parts of the country. When you collect $500 a month it comes to $6,000 a year. A 120 percent annual return on your investment.
Finally, think about how you sell this investment in a tough market place. Think, lease option. Buy for $5,000, rent for a 120 percent return on investment for a few years, and sell on a lease option for $7,000.
Like I started with, this is low cost, high cash flow investing.
All the Best,
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