help..thinking about buying a modular home @ a modular home/trailer home park

[dahlink]

Greetings MMMers,

  As the title states, I am actually thinking about taking a mortgage for a mobile home.
Here in San Diego I have found quite a few modular homes going between 25k-40k.  With approximated payments between 175-400 per month with 20% down.

Here are some examples:
http://www.trulia.com/property/3082126387-4814-Old-Cliffs-Rd-San-Diego-CA-92120
http://www.trulia.com/property/3077692714-2750-Wheatstone-St-211-San-Diego-CA-92111

Does anyone have any experience with buying modular homes @ a modular home park or in general?  Are there huge concerns to lookout for?  Any advice would be greatly appreciated.

More details on my situation:
My current rent is 999 +electric.  My electric is usually $50 so its about 1050 per month.  My rent is about to go up to 1105 and will be electric + water.  I currently in the military until late november when I will be transitioning to civilian life perusing life in the real market place or going to school.  I plan to join the reserves to keep my service years going.  I currently completely out of debt and have about 84k total of savings, investments, extra cash on hand, plus my car(13k going to trade down for better MPG soon).

[Devils Advocate]

Thank you for your service!  Also congrats on having a nice nest egg on a military salary.

It is my experience that these modular homes are a depreciating asset.  I would not take debt on a depreciating asset.

Good luck!

DA

[reverend]

Remember to check what the lot-rent is before you buy a trailer.  Sometimes that can be excessive.

[Bakari]

Remember to check what the lot-rent is before you buy a trailer.  Sometimes that can be excessive.

That's why I haven't done it.  If I have to pay rent or HOA fees, I may as well stay in my $7500 RV trailer.
OTOH hand, if you can find one where you are buying the land too, that would be an awesome price range.

Congrats on saving so much  - military pay plus benefits are super generous, but the culture and lifestyle is to blow it all.  The advice our instructer gave in finances class at A school was to save up for buying expensive toys like new cars, giant home theater or ATVs, instead of buying them on credit cards.  That one HAD to buy these things was just taken as a given!

[dahlink]

Thanks for the quick feedback and advice.  I caught on to the lot rent fees a little while after this post and down here in San Diego they can be quite expensive (850ish).  I may just have to do a 6 month lease and then move to another place once I'm off of active duty.  My father actually found a mobile home with the lot included.  Its in the desert and was a dirt cheap property investment paid for in cash.  If I could find that I think even though a mobile home is a depreciating asset, it should be really easy to break even each month if I can rent it out.

As for my nest egg, its not bad but I also had great wasting habits but always put assid in TSP first.  Then in the last 3 years I have been really ramping down.  It all started with cord cutting then finding cheaper cell phone service.  It's crazy to think how much money I would have 'stached if I'd had discovered these MMM tactics when I entered the Navy back in 2000.  Anyways, at lease I'm still young and no longer have the financial ignorance blinders on.

Thanks again,
dahlink

[unimaginitiveusername]

I am curious to hear what the MMM community has to say about this, because I have also looked into it.

A few of my thoughts, in no particular order:

Yes, mobiles/manufactureds lose value.  You are, however, extracting value from it while living there, because a) you have a place to live and b) presumably you're paying less / month for lot rent than just renting a place.  Or, like you said, if you have an MH on its own lot, even better.  I worked up a basic Excel sheet to calculate the net financial effect of buying an MH....including lot rent & maintenance vs. apt. rent, assumed buy/sell prices, etc.  With a few assumptions you can easily calculate a break-even date.  For the numbers I've run so far for my situation, after 1-3 years I would be ahead having bought a mobile.

There are, of course, a lot of things to watch out for when looking at an MH.  In the olden days they used to use aluminum wiring, and that can be a safety hazard.  In a lot of jurisdictions, you aren't allowed to set a mobile that doesn't meet certain criteria, which usually works out to mean anything older than (I think) 1976 has to stay where it is (unless there's a nearby county with laxer codes :) ).  Etc. etc. etc.

That first link has a lot rent of $876 a month!  Like you said, that's not much better than where you are now at 1100ish.  In my area, lot rent is more around 1/2 of a decent 1-bedroom apartment.

I just don't see taking out a mortgage for a mobile, myself....at least not for one of the lower (OK, not bottom-o-barrell) / mid range that you're looking at with 25-40K.  Personally, if I had the cash, and I were paying what you're paying for rent, I would find myself something different.  But you're in a different market. 

[Dicey]

That first listing is also in a 55+park, which may have a lot of extra amenities that are geared for seniors. Even though you're a vet, I suspect you aren't eligible just yet ;-)

The previous replies are very accurate, but your specific geography may yield a different result.

This subject caught my eye because San Diego is a unique situation. There are loads of older "trailer parks" scattered along the coast, particularly in North County. My parents bought one years ago in Leucadia. (I think it's part of Carlsbad now.) They enjoyed the shit out of their "beach house" and their little community for years and years. The site rent went up, predictably, but they were friendly with the manager and not every year brought an increase. When they were finally done with it, they sold it (for 6x what they paid) to a neighbor who was going to gut it and start over. Believe me, the thing was old to begin with. So if you are a handy person and don't mind a little sweat equity, take a drive north along the coast and seek out some of the less glamorous parks with the million dollar beach views.

A number of the units are owned by "Zonies", who summer in SD to escape the heat in AZ. If you're handy at all and friendly with your neighbors, you might just create yourself a tidy side gig doing repairs and keeping an eye on their places during the off season. In fact, now that I think about it, my folks found the place through a friend of my mom's. Her husband was newly retired and bored. He began buying up these trailers and rehabbing them, one by one. It kept him out of his wife's hair and he made a little money at it along the way.

My vote is to find a unit that needs some updating in an older, well kept park with reasonable rents and go for it! Great job on the savings amassed so far, and thank you for your service.