On my post warning against overpaying on rent , James poses this question:
Is it better to rent an apartment or buy a manufactured home? I found a good location where they are selling a 2 bedroom manufactured home for $170K. The mortgage calculator says, for a no downpayment for 30 years at 6.12% interest, I pay $1,032.39 monthly.
Today, Im renting a studio at $1,000 a month. So I thought would the mobile home be better? I mean in 3 years, I would have paid out 36,000 (more if the rent goes up). That money goes away. But I buy that mobile home, I can sell it in 3 years for a super discounted deal, say, 80,000. I would not be only be able to regain the 36,000 but also would have made money.
First, I think you’re getting too exotic by thinking about saving money by purchasing a mobile home and reselling it, recouping some of the equity and thus paying out less in rent. It’s certainly a very interesting decision and analysis but ultimately I think your assumptions are going to be your undoing on this one.
If all your assumptions go through, that you can purchase the mobile home and resell it at the stated prices, it sounds like your plan will work. Your assumptions, however, are very difficult to support and I am clearly not qualified to give you an advice on that. All I know is that there is a social stigma associated with mobile homes and I have no experience selling one, either first hand or anecdotally. What I do know is that you’ll have to put that mobile home somewhere and generally mobile home parks charge some sort of land usage fee that you didn’t figure into your calculation. You also have closing costs and selling costs that you haven’t factored into your equation which may make the decision less financially attractive. Then again, your extra low price of $80k may have accounted for all of this in its fudge factor, who knows.
All that being said, I go back to the beginning where I said this is probably making it too complicated and potentially putting yourself in a bad spot, especially if you experience difficulty selling it and have on your hands a depreciating asset that you can’t sell. Would I do this? Probably not. I don’t like committing myself to debt larger than my fist unless it’s a pretty sure thing and I don’t think your trade off necessarily is. It’s definitely an interesting question though.
Anyone else care to weigh in?