I definitely like trying and learning new things.  The world of mobile homes is one I have not done much work in. (Modular Homes are NOT mobile homes.) On one of the Real Estate Investing courses I took, they described Trailers, as little tin cans that spit out cash.  Considering the difference in price between a mobile home and a fixed house, this makes sense.  Mobile homes are much more affordable.  For example, I can get a nice mobile home for $80,000.00 or even less.    That means that I only need $16,000.00 (20%) as a down payment.  If I am looking at a detached house the average price in our area is about $300,000.00.  That means that you need $60,000.00 (20%) as a down payment**.  The difference between monthly rents is about $150.00 to $200.00 a month at most.  So, to keep the math simple, say you get $1000.00 a month rent from the mobile home, and you get $1200.00 a month on the house. If you look at the return on investment, the trailer is 6.25% a month and the house is 2% a month. ($1000.00 a month divided by $16,000.00 down payment is 6.25%, while $1200.00 divided by $60,000.00 is only 2%.)  Hence the Term spitting out Cash.

With a return like that, why am I not investing in mobile homes??  Like all things investing in Canada, reality hits hard.  Most mobile homes are in “PARKs”.  The mobile homes do not own the land that they sit on.  They rent/lease that from the park.  In Ontario, for sure, you can not get a BANK mortgage on any structure where you don’t own the land.  So even if you only pay $80,000.00 for the trailer, the amount over your down payment can not be a mortgage.  Most people get around that by turning it into a Line of Credit.  Instead of paying 3% on a mortgage you are paying 5 – 10% on a line of Credit.  Big increase in monthly expenses.  You also have the rent/lease payment to the park each month on top of that.  So where you might be able to carry a few mortgages, there is a limit on how much you can get on a line of credit.

The next major setback is that most parks, particularly the nice ones, will not allow anyone but the owner, to occupy the trailer.  So you can buy it, but you can not rent it out.  That really puts a stop to using mobile homes as rental properties.  If you really want to see some fireworks, just ask your local city planner about setting up a mobile home park.  I have inquired in 2 different areas and both don’t even want to talk about it.

My daughter bought a mobile home recently.  In her situation it was an extremely good idea.  She had the money from the sale of a house, so she could buy the mobile home outright, and did not need a mortgage.  The Lease of the lot, is less than half what an apartment rents out for, and she has her own space with a small yard in a very lovely setting.  Mobile homes do not go up in price at the same rate that houses do, but if they are kept up, they do not depreciated that much either.  She also does not care about the stigma of living in a “Trailer Park”.  Which is why she ignored dad’s advice.

Original Trusses

The mobile home needed some renovations, and since I work cheap for family, and I have never worked on a mobile home, I took on the reno.  The sagging ceiling was my first concern.  Never having worked on a mobile home I had no idea what to expect.  Because it is “Mobile” things need to light weight.  So the ceiling was 3/8 inch drywall.  That was to be expected.  The roof rafters being made out of 2×2’s was not.  I am sure the computer says they are strong enough but they sure don’t look strong compared to a house.  Now I did walk on the roof and it held me up, so I guess that it is stronger than it looks.  But the one inch of fiberglass insulation and the dry cleaner bag thick vapor barrier surprised me.  I added to the insulation, 3.5 inches of Rock Wool insulation and a new 6mm plastic vapor barrier.  I noticed that the heater now ran only twice an hour not every 10 minutes.  The walls are made out of 2×3’s but also only had the 1 inch of fiberglass insulation.  That was also replaced with R14 insulation and a new vapor barrier.

On the whole, the mobile home is sound, but it is nowhere near as solid as a house.  It did strike me that in these days of big concerns with “Affordable” housing, mobile homes could be a very viable option.  There are only two things standing in the way in my opinion.  Lack of building standards that come a lot closer to House standards, and the stigma that goes with the term Trailer Park.  Being able to build in a climate controlled factory, and with the modern materials available (SIP Structurally Insulated Panels, Steel roofing, laminated or engineered materials, etc) mobile homes could be a much more desirable and sound accommodation.

We are about half way through the renovation.  It will be a very nice home, and much warmer after we are done.  For the most part, renovating the mobile home has not been that much different than renovating a standard house.

**Currently in Ontario the mortgage rules are such that you need 20% down for a non owner occupied property.

If you have any questions on SIP Panels, I built my last 2 storey house with them.  I would never build with anything else.