This Month’s Featured Article

By Christine Bates | info@mainstreetmag.com

Unless you live in a mobile home or are part of the mobile home industry, few people are aware of the history, economics, and regulations shaping the mobile home real estate market. Main Street’s monthly real estate feature decided to investigate this unfamiliar segment of the residential real estate market.

A brief history Trailer to mobile home to manufactured home

Out of necessity during the Great Depression of the 1930s many unemployed and impoverished Americans started living in trailers originally designed for traveling and vacation. Parked on the outskirts of cities, trailers became associated with the down and out. During the post-World War II boom, manufacturers geared up to meet demand for affordable housing. By 1956 the “10-foot wide” was introduced along with the term “Mobile Home” and the industry exploded, growing from around 100,000 units produced in 1960 to the high point of 580,000 in 1973. New mobile home production fell steadily from its 1970s peak to only 70,000 units in 2015, with almost 20% of those units headed for Texas.

Local artist Eric Forstman remembers his childhood in the 1970s when Dutchess County roads were lined with the trailers of farm hands (see painting above, right).

While current household income levels of mobile home dwellers are half the national average (see Q&A), there are also exclusive parks – like Paradise Cove in Malibu, CA, inhabited by actors like Matthew McConaughey – where homes can cost over a million dollars and come with marble floors. There are also upscale communities like Parrish Manor in Raleigh, North Carolina, with football fields and a community garden, and well cared for parks for those over 55 years old.

Mobile homes are rare outside the US. In Europe, for a variety of reasons – including the relatively high cost of putting in the infrastructure for a mobile home park, better public transportation, and greater availability of subsidized housing – there are very few mobile homes. Perhaps, most importantly, there’s the American paradox that values owning one’s own home and, at the same time, loving freedom and mobility.

Where can you put a mobile home?

There are about 38,000 mobile home parks in the US. Typically these parks provide a mobile home site with services such as sewer, water, mowing, garbage removal, utility hookups – and sometimes amenities like community rooms, pools, and playgrounds. Residents either own their mobile homes or rent one and then pay a monthly fee for the site and services. Typically the land underneath the home is owned by the park.

State and local zoning codes in our tri-state area generally prohibit the installation of new mobile homes on privately owned parcels unless they are replacing an existing grandfathered mobile home, or are in an existing mobile home park. There are two exceptions to the general rule: A mobile home may be placed on a site while you build a home – but usually for only six months. And farmers in some areas may house agricultural workers in mobile homes if they are a certain distance from a public road. Again existing units are grandfathered – some of them with a fantastic view.

Nationally, new mobile home parks are not being developed. It is estimated that less than ten new parks are built each year – less than the number that are closed for re-development. Most of the good sites were taken thirty years ago, and restrictive zoning in most communities forbids new mobile parks and often mandates large building lot sizes. Bank construction financing is not usually available for new parks. Remote rural sites without zoning restrictions require expensive water and sewer infrastructure and are hard to market and fill with new residents. So the only place to permanently locate a new mobile home is on a grandfathered lot or in an existing park.

How much does a mobile home cost?

The national average sales price of new mobile homes has risen from $20,000 in 1980 to $64,000 in 2013 according to the MHI (Manufactured Home Institute, an industry association). John Alvarez is a dealer in Hudson with new models available for $50,700 for a standard model, to luxury models for $82,600 (see photo). This cost includes transportation from the factory in Pennsylvania and on-site installation.

Existing in place previously occupied mobile homes are available in our area for much less. In September, Arleen Shepley, a broker with Elyse Harney Real Estate in Millerton, sold an existing mobile home in Benwood Knolls, a mobile home park in the Town of North East, for $38,500. “The possibilities that an existing mobile home can offer over building a large home can be affordability, less maintenance, and lower taxes. Not everyone wants to live in a mobile home, but there is a lot that can be said if you are weekender or even a full-timer, and just want a simple place to live with an incredible view.”

Mobile homes in parks are not typically listed in the MLS because they are not considered real estate unless they are on separately owned parcels of land. Nick Staley, a Rhinebeck realtor, currently has two older mobile homes in parks for sale for $23,000 and $35,000. He pointed out that with decent credit and 10% down, a mortgage payment might be only $200 to $300 a month, plus the monthly park site rental charges of $400 to $500, making buying an attractive proposition. Staley has his own investment property on the market for $475,000 that includes a five bedroom Victorian house and two mobile homes, occupied by long-term tenants who pay a combined $2,000 a month in rent.

Are mobile homes a good investment?

Like a car, the value of a mobile home may lose value, but if it comes with an owned site, the land itself might appreciate over time. There are even investors who make money by flipping mobile homes in parks. They buy them for cash since financing can be difficult for many buyers, and then sell them with owner financing and collect the interest. Or they may simply rent them with a healthy cash flow and after tax return. For the renter who is saving money by paying a lower rent, it can be the right decision financially, as is also the case for a buyer who has shopped around and paid the right price.

There are large variations in the price of the exact same mobile home model produced by the same company. A study by Consumer’s Union cited a Texas example where a new single wide cost $42,000 in Dallas County when the identical version could be had for $33,800 in the next county. NADA guides, the Kelly Blue Book for manufactured homes, are available online to estimate values for new and used mobile homes.

For a number of reasons interest rates are higher, collection tactics more aggressive, and foreclosures on financed mobile home purchases are more common than on conventional homes. These loans are personal property loans and carry less protection for the borrower. A mobile home can be repossessed just like a car. Experts advise searching for independent financing rather than going through a dealer. In one research study the savings were an average of 10.9% points cheaper. And independent lenders will require an appraisal, which will assure the buyer that they are paying a fair price.

Buying an entire mobile home park can be a lucrative investment

If you’ve never thought of buying an entire mobile home park, visit Mobile Home University on the Internet, which claims that parks have the highest yields in commercial real estate, with starting cap rates at over 10%. According to New York State sales data, over 345 mobile home parks have been bought and sold in New York State in the last ten years. Most of the activity is in the Western and Southern tier with the highest sale in Niagara County of $37 million. Surprisingly, Dutchess County is also very active with 13 sales recorded, totaling over $30 million, and averaging $2.4 million per transaction. In August of 2014 an LLC purchased Tally Ho Park for $6,275,000. Tally Ho, located on the edge of Amenia, has 35 acres, and 147 units – the vast majority of the homes were built in the 1970s.

A mobile home as something else

You don’t have to live full-time in a mobile home. They are used in Florida as vacation rentals, hunters often repurpose them as forest cabins, and others use them as a home office away from home. Mimi Ramos, a real estate broker with Elyse Harney Real Estate, found a 1973 Airstream on Craigslist three years ago and converted it into a travelling clothing and accessories boutique with the help of her creative partner, Richard Lanka (see photo). “I have never used it for its original purpose as a travelling home, and I feel it’s one of my best investments because I can turn it into anything I want with a little imagination and a lot of elbow grease,” mused Ramos. “Honestly if I could, I would purchase a few more and turn them into several other kinds of mobile businesses – a restaurant, a bar/lounge – and perhaps I would save one for a mobile guest house.”

Just like houses, there are good mobile park neighborhoods and less desirable ones – well-kept parks that provide security and services and slipshod ones. Wayne Euvard, Amenia’s former supervisor and current assessor, observed, “Tally Ho is a great place to campaign because you can talk to so many people without driving around. They are good citizens – nurses, painters, the handicapped, retired people – who all vote.”

Mobile homes are an affordable housing solution for many people. Referring to residents as “trailer trash” is an ugly slur based on ignorance that inaccurately stereotypes a group of people based merely on where they live. Truly derogatory terms should be aimed at those in the mobile home industry who engage in misrepresentation, predatory lending and harsh foreclosure practices.