Flipping mobile homes can be an attractive entrepreneurial prospect, especially if you’re somewhat handy and live in a well-populated area. Mobile homes are almost always much less expensive than houses, which means flipping mobile homes has a lower bar to entry than flipping houses. This doesn’t mean they’re a no-risk investment strategy, though. Just like flipping houses, flipping mobile homes comes with challenges and potential pitfalls.
Set a Budget
Before you start finding mobile homes for sale, create a budget for yourself. Your budget shouldn’t be the maximum you’re able to pay for a home; it needs to be the maximum you can afford to put into a home. In other words, you might budget $40,000 to flip a mobile home. Realistically, this could mean spending $20,000 on a home itself and $20,000 more in repairs.
Mobile homes are relatively inexpensive, which means that even with improvements, you have to be realistic about the profit you expect to turn from selling a flipped mobile home. A mobile home that cost you $40,000 total might end up selling for $65,000, netting you a $15,000 profit. When you set your budget for a flip, always have a conservative sale figure in mind. This number is the lowest amount of money for which the house can sell and still result in a profit for you.
Find Mobile Homes for Sale
The key to getting inexpensive mobile homes that have resale potential is finding them as soon as they hit the market or even before they hit the market, if possible. Check websites like Realtytrac.com every day to find properties in preforeclosure and those that have already been foreclosed. In many cases, these properties can be purchased at foreclosure auctions or through real estate agents who deal specifically in bank-owned properties.
If you’re not a general contractor or an experienced flipper who can accurately estimate repair costs upon seeing a home, bring a trusted contractor to visit any mobile home you’re able to enter before bidding on it at auction. Many mobile homes that go to auction have severe maintenance problems and repair needs, and in some cases, the cost to make a mobile home appealing to buyers is too great for it to be profitable. Typically, homes sold at auction are sold as is, so you take on all of a home’s risks and problems when you buy it this way.
You can also find mobile homes for sale through real estate listings and private sale ads. Facebook Marketplace, Craigslist, your local newspapers and real estate websites are all places to search for mobile homes to flip.
Have a Go-To Team for Flipping Mobile Homes
Having a list of go-to professionals is a huge asset when you’re flipping mobile homes for profit. Even if you’re a skilled handyperson, there are some renovation and repair tasks you simply cannot do legally if you aren’t a licensed contractor. To complete the home improvements that need to be performed by licensed and bonded tradespeople, make sure you have at least a general contractor in your network.
Your professional network should also include a realtor, a real estate attorney and a title insurance provider. Working with these professionals can make the transaction process smoother and help you avoid legal challenges, like finding there’s a lien on the home’s title after you’ve purchased it.
Know What Repairs Cost
If you work with a contractor, he can estimate repair costs for mobile homes you’re considering before you buy them. If not, educate yourself about common repair costs. Knowing approximately how much common issues in mobile homes cost to repair can help you differentiate good investments from poor ones. Particular areas to understand are:
- Roofing — how to identify a roof that needs to be replaced versus one that only needs repairs
- Electrical — diagnosing electrical problems and estimating repair costs
- Plumbing — spotting common issues and what they cost to repair
- Water damage and its remediation
- Pest infestations and their extermination
- Heating and air conditioning system problems and their repair costs
Just like a house, a mobile home needs to have a certificate of occupancy in order for buyers or tenants to legally move in. If your mobile home does not have a certificate of occupancy, as can be the case with a foreclosed or bank-owned property, you need to obtain one from your city or county before you sell it unless you make it the buyer’s responsibility to obtain one. A certificate of occupancy shows that a home meets the building codes for the jurisdiction where it is located.
Know Which Improvements Are Worthwhile
With any mobile home flip, your goal is to make the home as appealing to potential buyers as possible. You can drastically improve the home’s curb appeal with a few relatively simple improvements, like replacing the carpeting and power washing the home’s exterior. Other ways to upgrade a mobile home and increase its appeal with buyers include:
- Replacing the appliances
- Replacing the furnace
- Upgrading the cabinets and countertops
- Renovating the bathroom
When you plan to make improvements to a mobile home, keep your budget and potential profit in mind. A quick online search can help you determine which improvements deliver the best value for the amount of money you’ll spend. By understanding this, you can determine whether there’s room in your budget to make substantial upgrades to a mobile home or if you will only profit by making minimal cosmetic improvements.
Price Mobile Homes for Sale Competitively
The last step in flipping mobile homes is putting them on the market and selling them for profit. Once all the repairs on a mobile home are complete, you should have a pretty good idea of what it can reasonably sell for based on its condition, its upgrades and the selling prices for similar mobile homes in the area. Compare your finished home with similar finished mobile homes in the area to see how much they’re selling for and how long they typically stay on the market before being purchased. Selling the home isn’t your only goal — selling it in a timely manner generally means a larger profit for you.
One way to maximize your profit is to sell your flipped mobile home yourself rather than working with a realtor. In many states, it’s possible to complete the sale of a home without any realtor involvement. This process is known as “for sale by owner”. However, some states require that a real estate agent handle the closing paperwork for home transactions, so check your state laws to determine if this is the case for your state.
Although working with a realtor to sell your flipped mobile home costs money and can cut into your profit, there are numerous benefits to working with a professional. One of these benefits is how a realtor is equipped to market a home effectively and attract more potential buyers. She also has extensive knowledge of your area’s real estate market trends, relevant real estate law and the processes involved in selling a home, which saves you time and effort and can give your buyer peace of mind.
- Bay Cities Construction: Licensed General Contractors: What Can General Contractors Do?
- Big State Home Buyers: What is a Lien and Can you Sell a House with a Lien on It?
- Realtor.com: How to Finance a House Flip: 5 Types of "Fix-and-Flip" Loans
- Home Flipping Academy: Flipping Mobile Homes - What you Need to Know
- HomeLight: Do You Need a Certificate of Occupancy to Sell Your House?
- Make sure you only buy a mobile home you intend to flip with money you can afford to lose. Under no circumstances borrow money to finance the flipping of a mobile home.
Lindsay Kramer has been a full-time writer since 2014. In that time, she's experienced the ups, downs and crazy twists life tends to take when you're launching, building and leading a small business. As a small business owner, her favorite aspect about writing in this field is helping other small business owners and aspiring entrepreneurs become more fluent in the terminology and concepts they face in this role. Previously, she's written on entrepreneurship for 99designs and covered business law topics for law firms.