Tuesday, April 28, 2009

Terminology Tuesday - Mobile Home

I think it's important to know the terminology and words used when learning any new business including mobile home investing.

So, I came up with "Terminology Tuesday" as a day to go over the terminology used in the mobile home business. It's important to know the terminology when talking to people in the business so you're all on the same page.

For today, we'll go over the word "mobile home." Here's what it's defined as in Wikipedia:

"Mobile homes or static caravans are prefabricated homes built in factories, rather than on site, and then taken to the place where they will be occupied. They are usually transported by tractor-trailers over public roads to sites which are often in rural areas or high-density developments. In some countries they are used for temporary accommodation on campsites. While these houses are usually placed in one location and left there permanently, they do retain the ability to be moved as this is a requirement in many areas. Behind the cosmetic work fitted at installation to hide the base, there are strong trailer frames, axles, wheels and tow-hitches. The two major sizes are single-wides and double-wides. Single-wides are eighteen feet or less in width and 90 feet (27 m) or less in length and can be towed to their site as a single unit. Double-wides are twenty feet or more wide and are 90 feet (27 m) in length or less and are towed to their site in two separate units, which are then joined together. Triple-wides and even homes with four, five, or more units are also built, although not as commonly. They also differ from site built homes in that it is not uncommon for owners to "Trade up", as one might with a car. While site-built homes are rarely moved, mobile home owners often "trade", or sell their home to a dealer in the form of the reduction of the purchase of a new home. These "used" homes are either re-sold to new owners, or to park owners who use them as inexpensive rental units. Single wides are more likely to be traded than double wides since removing them from the site is easier."

Some examples of single-wide sizes include: 12x50 (these are the smaller ones and much older - 60s, 70s), 16x56 (these are usually considered "standard" in the 80s, 90s), 16x66, and 16x80. Sometimes the measurement includes the hitch - what is used to pull the home when moving, so be careful when using measurements. Usually, I allow an additional 4 ft for the hitch. So, if a home was a 16x80 - it may be a 16x76 without the hitch but with the hitch it would be 16x80.

Some examples of double-wide sizes include: 24x48 (this is a very small and short doublewide - good if you're trying to fill a smaller lot), 24x60, 28x80.

In general, I stick to single-wides. Why?

In most cases, you end up spending more on double-wides - double the cost of a single-wide. If you plan on selling using seller financing, usually the amount you can seller finance in a park is about the same for single-wides and double-wides. By the same, I mean what people can afford to put down and what they can afford as a monthly payment. Also, if you plan to move any mobile homes - you will probably pay double the cost to move a double-wide than a single-wide.

Though, if you do come across a deal on a double-wide and the numbers work for you - it just may be worth it. As always, you need to work the numbers and do your due diligence.

Happy investing!

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