Mobile Home Investment Questions

[bizaro86]

Hello,



I was hoping some of you may have some past experience regarding mobile homes. Do they have titles (in Alberta) or is there a registry for serial numbers similar to how autos work?



How would I check whether a mobile home has a lien against it? I'm looking at buying for cash, so I wouldn't need to get a loan, but would want to make sure I had clear title.



Also, would potential arrears in lot rent attach to the home? Would that be senior to a lien? I'm looking at an exit strategy of selling with seller financing, so I'd want to understand what claims could be senior to my lien.



Were there any major changes in the building code for mobiles. Intuitively a 2004 mobile is much better than a 1974 mobile, but was there any point where a change in rules occured (ie a 1996 is much better than a 1994 or something like that)



Is there anything else I didn't ask that I should have? Any words of widom or experiences? Anecdotes also welcome.



This is a type of housing that doesn't get much investment writing done on it, so anything you have would be welcome.



Regards,



Michael

 

[moparcanuck]

I can only answer a few questions, on the list, but I do invest in some mobiles.



In Alberta, there is no title as such, and no VIN type registry. However, there is a serial number. These are not recorded very well in any central database, but you can run a personal property registry (PPR) search via most Alberta Registry outlets. You can run on either (I recommend both) the Serial number of the trailer, and the name of the owner(s). That should, in theory, show any liens on the mobile

 

[invst4profit]

Alberta is not my province of operation but I am familiar with Mobiles in Ontario.

Many of your questions may be answered by the park owner where the home is located. We often know who has loans and who owns outright. We obviously know who is in arrears of rent and this can be used as leverage when buying. You may be negotiating with the homeowner and park owner. As well if you own a home in a park or have owner financed you can ask the park owner to keep you informed as to whether the lot rent is up to date. If your buyer is on the verge of defaulting on your loan they will likely have stopped paying rent.



If you are serious about the option of buying to resell get to know the park owners as they can assist you on rent, resale value and more importantly their screening criteria for new buyers. You need the park owners support so make them your new best friend.



My standards as a example are quite high and as such many potential buyers do not qualify. I believe this would be a benefit to you in your venture as it will insure a higher success rate. The higher the quality of the park the more secure your investment.

Stay away from Trailer Parks and concentrate on Mobile Home Communities.



As far as codes are concerned obviously the newer the better but generally anything from the 90s or newer is of the best quality relatively speaking understanding the quality is not that high for any Mobiles. However your buyer is most likley only looking for a afordable home and likley has no knowledge of "quality".Your biggest issues are water around windows, bathrooms, doors etc.

Check for spongy floors in these areas as you do not want to waste time and money on repairs or upgrades. Clean, paint and possibly flooring should be the extent of your repair costs. Adjust your personal standards to the buyer otherwise you are throwing money away.

Contact the local building inspector for specifics on code changes particular to Alberta.



Remember Mobiles are a depreciating asset. They need to be maintained and upgraded to simply maintain their value. As with any home investment purchase finding a desperate seller is the key to success so get to know the park owners.

You have a distinct advantage in purchasing with cash as loans on mobiles are extremely difficult to get but your prospective buyers are of low quality generally speaking so there is risk of having to repo the home. This is again where buying in higher quality communities is to your advantage as the potential buyer is of higher quality/lower risk. The best buyers are retirees, seniors looking to downsize or snowbirds looking for a inexpensive summer home.



Your likley resale profit may be low depending on purchase price but remember you are responsible for lot rent, water fes and taxes while you are selling. Interest on the loan will be your positive cash flow. In Ontario the rate depends on how high a risk the buyer is so make sure you do all the credit ckecks and back ground checks. Banks here will generally charge around 9% - 10% on a chatal mortgage. Private loans up to the mid teens depending on down payment and credit risk.