Author Topic: Double Wides Vs. Duplexes Vs. Apartment Complexes  (Read 1195 times)

arach

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Double Wides Vs. Duplexes Vs. Apartment Complexes
« on: March 01, 2018, 05:12:46 PM »
I own NNN commercial realty. I want to get into residential.

after doing a lot of research, I determined apartment complexes were the way to go. You have enough similar units that they are easy and affordable to maintain, and the purchase of one 10-12 unit complex could cover the cost of a management company to deal with the annoying nightly phone calls.

After about a year of not finding anything because they sell in 12 minutes, I thought about expanding my search.

A lot of people start with Duplexes, but the numbers don't add up to me... they seem overpriced (maybe its just the market right now) for the ROI on them, and they don't offer a lot of standardization or ability to maintain a single-location worth of maintenance.

Then I started looking at trailers/double wides. I can get several of them in the same area- not as good as apartment complexes- but they are more readily available. I know a lot of people follow the 1% or 2% rule, and these bring in 4%. They literally pay for themselves in 2-4 years depending on maintenance costs. They are cheaper per unit than apartments, but I recognize the maintenance is a hair higher.

I'm not talking about buying in trailer parks, but rather the ones that are in lower priced suburban neighborhoods.

Anyone have any experience here, or see a flaw in my logic?

Thanks!

penguintroopers

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #1 on: March 02, 2018, 09:48:01 AM »
I have very little experience buying RE or being a landlord, but I do know that from my dad buying and selling them they rarely (almost never) go UP in value. In fact, their depreciation is similar to vehicles. Duplexes, SFH, and apartment complexes will all have appreciation, but mobile homes will not.

Second point I also picked up on was when you buy a used mobile home + land, most of what you're actually paying for is the land. Little of the "appraised" value of the mobile home is actually the mobile home.

Just my experience, and I stand a very good chance of being wrong, but those are two things I have noticed.

kanga1622

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #2 on: March 02, 2018, 04:47:52 PM »
One thing to think about is having things fixed in a mobile home. In my part of the country, many electricians and plumbers refuse to work on mobile homes. Many had their pipes freeze this winter as all the runs are below the until and not insulated well enough.

 In my town you donít get a very high quality renter as these are usually the cheapest rental per bedroom and therefore you get lots of people with low incomes that canít afford another option and also canít afford the much higher heating and air conditioning that goes along with mobile homes in the Midwest. I see many of them for sale in my area for less than $10,000 and they are only 30 years old.

Buyers for mobile homes when you are interested in moving on to another investment can also be quite difficult to find. They often sit on the market for a long time here.

sailinlight

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #3 on: March 02, 2018, 05:07:51 PM »
I disagree that mobile homes depreciate at the same rate of a vehicle. We have several, and I assume a lifespan significantly less than a stick-built house, but at least 30 years, if the same maintenance is performed as a SFR. I have found that tenants who will rent a mobile homes tend to stay much longer and live simpler lives than those in SFRs; generally older gentleman or couples who do not entertain much (less wear and tear on appliances and carpet). So far it has been very lucrative for us (we've only owned the property about 5 years, but the units are an average of 20 years old, and the tenants have been there about as long- very low turnover).

EXLIer

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #4 on: March 03, 2018, 02:19:43 PM »
A few things to consider, as I've owned a MF home in the past.

1.  The lot it sits on...do you rent it or own it?  Leased lots....you're at the mercy of the land owner.
2.  They ( the house itself ) will not appreciate.  It will depreciate and 99% of people will always recognize it as MF house.  That is unless you do major changes of the appearance.
3.  The house I owned, believe it or not, I had less issues with it than I did with my custom built personal house.  MF's are built to a rigorous standard, in climate controlled factories, using jigs, and designed to be driven down the road a few 100-1000 miles.

« Last Edit: March 03, 2018, 02:31:47 PM by EXLIer »

arach

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #5 on: March 04, 2018, 08:15:46 AM »
I greatly appreciate the thoughts.

The funny thing about the vehicles is that all my vehicles appreciate.. haha. So I have a hard time with that analogy. (I follow the car ownership principles of https://www.amazon.com/Car-Ins-Outs-Buying-Selling/dp/1495257029 ) so if I extrapolate that analogy a bit further, while they depreciate for many people, in theory if they are played right, they may not depreciate...

The second piece is, does depreciation matter that much if they pay themselves off in less than 2 years? I get that the asset value is reduced greatly.  hence the term "depreciation", but paying (numbers used for simplicity) $100,000 for $1,000,000 in income over ten years with a residual resale of $25,000 is an annualized return of 26.2%.

A few things to consider, as I've owned a MF home in the past.

1.  The lot it sits on...do you rent it or own it?  Leased lots....you're at the mercy of the land owner.
2.  They ( the house itself ) will not appreciate.  It will depreciate and 99% of people will always recognize it as MF house.  That is unless you do major changes of the appearance.
3.  The house I owned, believe it or not, I had less issues with it than I did with my custom built personal house.  MF's are built to a rigorous standard, in climate controlled factories, using jigs, and designed to be driven down the road a few 100-1000 miles.
I anticipate avoiding leased lots and stick to purchased lots, so I get that concern. I don't know if its a regional thing, but around here MF homes on purchased lots are commonplace in small towns. Very interesting to hear about your personal experience. that actually makes it less concerning to me!


I disagree that mobile homes depreciate at the same rate of a vehicle. We have several, and I assume a lifespan significantly less than a stick-built house, but at least 30 years, if the same maintenance is performed as a SFR. I have found that tenants who will rent a mobile homes tend to stay much longer and live simpler lives than those in SFRs; generally older gentleman or couples who do not entertain much (less wear and tear on appliances and carpet). So far it has been very lucrative for us (we've only owned the property about 5 years, but the units are an average of 20 years old, and the tenants have been there about as long- very low turnover).

This is very helpful information! Thank you! It sounds like you'd recommend it.

One thing to think about is having things fixed in a mobile home. In my part of the country, many electricians and plumbers refuse to work on mobile homes. Many had their pipes freeze this winter as all the runs are below the until and not insulated well enough.

That is interesting. I was thinking about hiring my own full-time handyman to maintain my properties. This actually makes that suggestion much more compelling.  I never knew that, so I'll have to check with a few up front, as I never thought they'd reject a job!

Roadrunner53

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #6 on: March 04, 2018, 09:07:24 AM »
My friend lives in a mobile home in a nice park. There is a handyman who works on just about everything in the park from installing ac/heat units to fixing pipes under the homes. The guy even has a crew to mow and do snow clean up. He must make a fortune. However, if I were a tradesman I would reject crawling under a MH  to fix pipes and insulation. It can be nasty under there. Stray cats, raccoons, skunks, woodchucks and whatever else sometimes find homes under the units. Not to mention working on your back or belly. Not the best working conditions. No thanks to that!

dummy

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Re: Double Wides Vs. Duplexes Vs. Apartment Complexes
« Reply #7 on: March 07, 2018, 12:16:51 AM »
Manufactured Homes are made cheaply.  Everything seems low rate like walls, faucets, tubs, carpet, etc.  They are no where near equal to SFH or Apartments.

With that being said, my wife and I have a double wide on some acreage that we use as a get away cottage and I love it.  There are many in the area and no tradesmen have ever batted an eye regarding repairs needed.  If you own the land I'd have no problem renting one out.  We have a well and septic and are on the main electrical grid.

Ours has been easily insured, but I have heard stories about some being hard to insure.