With the real estate market in Sonoma County on the rise, some renters are left scrambling for more affordable options, while some first-time homebuyers are starting to despair over being able to afford a home at all.
This is where mobile homes start to gain a homebuyer’s attention. For a fraction of the cost of a traditional stick-built home, someone can purchase a sizable modular home in a park that often includes amenities such as a pool and rec room. In addition, many of the newer homes are so well designed that they can be difficult to tell apart from a traditional house.
But there are differences, some of them financial. These differences can have a very real impact on the homebuyer further down the road, and just like any other real estate transaction, the decision to purchase a mobile home shouldn’t be entered into lightly.
For the last eight years, my family and I have been living in a modular home while our house was being restored and renovated. Much of this information is first hand; good, bad, and hopefully informative.
It will be harder to get a loan for a mobile home.
Many bigger banks, like Wells Fargo, and other real estate lenders, don’t like mobile homes because they’re classified as personal property, just like a car or truck, and not as real estate. This is seen as a big risk for many banks, and they’d simply rather not deal with mobile homes.
You’ll get a tax break.
When you do get financing for your mobile home, the perk that comes at tax time is getting credit for all the interest you’ve paid over the year. If you were a renter before buying your mobile home, this may come as a welcome surprise.
Though you own the house, you’re just renting the land.
The good thing about this is that the park management is responsible for paving the streets, and keeping the park in good condition. This can be a downside for those who enjoy gardening, however, as most mobile homes have very tiny yards and the park usually dictates what the homeowner can or cannot have on their lot.
Utilities aren’t generally included in the HOA/space rent fees.
Unless the rental contract with the park specifies it, you’ll be responsible for your gas, water, and garbage.
You will still be responsible for property taxes.
Though you don’t pay taxes for the land, you pay property taxes on the structure itself. Thankfully, this is far less than what you’d pay for a traditional home. My property taxes this year were around $600. You pay taxes on what the state assessor finds your structure to be worth every year. This generally means that the tax amount decreases each year, too.
The park usually has a pool, spa, and/or workout room.
The park amenities can sometimes be worth the space rent if they have a park clubhouse that includes a gym and pool. It will save the homebuyer from paying for a private gym membership as long as they aren’t looking for fancy/high-tech gym equipment.
You’ll need to pay for home insurance.
A mobile home is still a house, and you’ll still need to carry home insurance. In fact, if there’s financing for the home, it’s a requirement. Depending on where the home is located, it may sometimes be more expensive to insure than a traditional home.
You can expect your space rent to rise on a yearly basis.
The manager of the mobile home park that the home is located in is still a landlord, and space rent tends to increase, just like apartments or other rental properties. In some cases, a mobile home park may be considered low-income housing and have a rent increase cap of 6% or less (yearly), but this isn’t true across the board. A worst-case scenario is being evicted and being told you have 60 days to move your home off the land or forfeit it. This rarely happens, but it’s a very real possibility to keep in mind before buying.
In general, mobile homes don’t appreciate in value.
Unlike traditional homes, which vary in value with the real estate market, mobile homes rarely appreciate. When it comes time to sell, breaking even is considered a huge stroke of luck. Most mobile home owners aren’t so lucky.
The stigma is real.
If you have a thick skin and an ability to laugh at your living situation, then a mobile home may be a good choice. As juvenile as it may be, the long-standing prejudices against mobile homes and mobile home parks still hold in the minds of many. I’ve lost count of the number of trailer park jokes I’ve heard.
Addendum: There’s a good point that was recently made about rent control, and it is true: Santa Rosa Mobile Home Parks are protected with rent stabilization, and across the board in California most, but not all, mobile home parks have also gone through arbitration to set limits – but it varies by park, so that omission was made on my part to keep it general; rents will rise.
I didn’t mention the owner-occupied parks because they’re rare, and anyone can buy a mobile home and place it on land that they own, whether in a park or not. In fact, if someone has the ability to buy one of the newer models and do this, it may be one of the better deals around, as the manufacturer will usually transport the home, pour the foundation, and set it up for $10,000 – $50,000, depending on distance and location.