Local economy

[Teen2233]

What effects does the local economy have on the mobile home industry? I live in northen MInnesota, the largest/closest city has a population under 100,000. And it seems to be lowering, people are being laid-off, companies closing, and there is just a high unemployment rate, and a high percentage of the jobs are low-paying. Do these benefit the mobile home industry(hope to do lonnie deals since i have a low amt of money of money to start with.)

[Jim Johnson]

I love mobile home stuff.... for what it is worth, this is what I look for.
1) What is the average selling price of a home in the local area?
2) What does the average renter spend on a 2 bedroom or 3 bedroom home?


Then you have to look at what space rents are. Let us run two scenarios using the same home located in two different parks. The home will be a 1980 singlewide, 3 bedrooms / 2 bathrooms 14 x 72. Your cost on that home is $3000 and it is set up and ready to go. In a smaller town, say average home price is $85,000. The local space rent is $100. In addition, a person rents a 3/2 apartment for $650/month. You will probably get for a total payment on the home, $500 per month. That will include the space rent. So if you sell the home on a note, for $10,000, you get $400 per month, $30 of that will pay insurance. At 15% interest, the note is paid off in 33 short months and you net about $13,300. Your cash on cash return is about 148% per year.

If the average home price is $250,000 and space, rent is $450. (Like Denver Colorado) The average 3/2 apartment goes for $950. I can probably get a payment of $800. $450 goes to the park, I get $350. Remember $30 of that goes to insurance so my net is $320. A 128% return, which is paid off over 40 months. My total return is about $14,000.

Now… the downside… when the space rents are $450 a month and you have 10 open units, writing the $4500 space rent check the first of every month sucks. I do not have 10 open units but I know people who do, they go out of business quick. It is harder to get hurt in smaller ‘space rent’ parks. In addition- if a community has parks with playgrounds and pools, they pull a premium for space rent. Remember, people have a set amount they can spend on housing. Balance between space rent, amenities and payments on the homes is key. The parks in Denver are hurting. When space rent is higher than the home payments… I raise the RED FLAG…
Happy Wheel Estate investing!


What effects does the local economy have on the mobile home industry? I live in northen MInnesota, the largest/closest city has a population under 100,000. And it seems to be lowering, people are being laid-off, companies closing, and there is just a high unemployment rate, and a high percentage of the jobs are low-paying. Do these benefit the mobile home industry(hope to do lonnie deals since i have a low amt of money of money to start with.)