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Dave Ramsey’s View On Mobile Homes is Wrong. We explain why.

So one of our students actually sent us a few clips from Dave Ramsey. And when we looked at it and we were like, ‘Wow, we want to unveil the myths and debunk some of the myths that are said about mobile homes.’

There’s a lot of gurus and professionals out there that just have a bad perception of mobile homes and it just blinds them from so many opportunities.

And we just want to throw out a disclaimer that we’re coming from the mindset of an investor. So all you Dave Ramsey fans out there don’t tune us out too much. You know, we love Dave Ramsey. We respect what he does. He helps a ton of people out there, but we just want to shed some light on some of these topics and clear the air.

So in this blog post we’re going to break some of the stigma that you hear from big names gurus out there who will tell you there’s no money in mobile home investing.

Dave’s View: “All mobile homes go down in value”

“Well let’s start with this. You’re not wise to invest in mobile homes because they go down in value. None of them go up in value. So no you don’t need a double- wide.”

“You make $140,000 a year. Let’s build a house. Okay?”

“Because at double-wide you pay 70 grand for it and in 5 years it’s worth nothing. Right? Yeah it’s going the wrong way dude. We want it to go up. Not down. And a house would go up in value.”

The point that Dave is actually trying to make is that mobile homes depreciate. And yes, mobile homes do depreciate. Just like any stick-built house, the actual house and the materials that the home is made out of do depreciate too. What really adds value to the home are its location and the condition of the home.

But when he says that no mobile home ever increases in value and that a mobile home that’s worth $70,000 is going to be worth nothing in 5 years, is absolutely false. It really depends on where it is located, the condition and the desirability.

A lot of buyers will look at that home and say, ‘Hey that home is in a really great park. I desire it even more.’ Or they say ‘The land in a really great location that the mobile home is sitting on.I desire it even more.’ I think that his statement was a little too broad.

We’re just coming from a subjective place. I think it comes down to overall market conditions. You can’t always think that real estate is always going to go up in value. When we’re talking real estate we’re talking about purchasing a single family home.

We know from investors here that after 4 or 6 years they’ve actually lost money, or were okay with just getting a return of their money back and breaking even. Depending on the market you’re in, you know, it’s not always the case that it goes up in value.

Next, let’s talk about the year of the mobile home. If you buy a 2018 mobile home for $70,000 and you move it out to certain markets like So-Cal, or even some parts of Washington or Portland, Oregon, you might see that home go up in value after it’s moved and put in a park. And sell for $100,000, $150,000, even $200,000.

And these are in parks. We’re not even talking about putting it on an individual parcel of land. So it was a little subjective for us and we wanted to give our subjective opinion.

Dave’s View: “Houses always go up in value”

“I wouldn’t buy a mobile home. Mobile homes go down in value. It’s the only thing you own, that you live in, that goes down in value.

Even if you buy dirt under it, that goes up in value more than it goes down in value so it appears you didn’t lose money, you’ve lost money.

You buy a $50,000 mobile home, in a few years it’s a $10,000 mobile home. You buy a $50,000 house, in a few years it’s a $100,000 house.

I mean, cars go down in value. Mobile homes go down in value. It’s a car you sleep in. I mean, that’s what you’re dealing with.”

A house is just materials. It’s the land underneath that goes up in value. Again, a house is simply materials. A house will depreciate just like a mobile home will depreciate.

Now land, just like any other asset it can go down in value. It won’t depreciate from an accounting standpoint, but it can go down in value. If you’re just assuming that you can buy a $50,000 property, and in 4 to 6 years it’s going to go up in value to $100,000 dollars without you putting any work into it whatsoever, best of luck to you.

When talking about building a house versus putting a mobile home on land, it’s not just the appreciation that you need to be worried about when you’re thinking of putting a mobile home on a vacant piece of land.

It’s going to take considerably less time, resources, money and energy than building an entire house. Just the permit process, the team, the infrastructure that it takes to build a house, those are all costs that you have to come up with.

And if you’re just only looking at gaining appreciation on that investment, then it doesn’t make a lot of sense. It doesn’t make more sense when you can put a mobile home on that property in a lot less time to make money. It really just depends on the situation.

Dave’s View: “The marketplace does not respect your product”

“It’s a mobile home. Okay, great. That means it’s a house that can leave on a trailer. It’s mobile. Okay, that tells you something”

“And so if you’re in that business, I’m not mad at you. But the data in the marketplace says the marketplace does not respect your product like it does a traditional stick-built home.”

Saying that the ENTIRE marketplace does not respect our product, as mobile homes or manufactured homes, is just not true.

Maybe what Dave is trying to say is that, you know, there’s a lot more people wanting to live in stick-built homes. Because out of the whole buyers pool that’s what people are conditioned to think. But there’s still a whole huge section of buyers that need affordable housing because they can’t necessarily qualify for those stick-built houses or maybe they just want to live in a more affordable way.

Dave might not respect mobile homes or might not want to live in a mobile home, but that’s just his perspective. His perspective doesn’t represent the entire marketplace. We tell this to our students all the time as well. You guys might not want to live in a mobile home either, but again, you are not your market.

Let’s talk about, you know, flying in an airplane. Of course, a majority of people probably prefer to fly first class. But for the people that don’t necessarily qualify or can’t afford first class tickets, for them to say I don’t respect this airplane because I have to sit in coach? That’s not true. It’s still going to serve a need and get you from point A to point B.

It’s the same thing with mobile homes. We’re serving the needs of people that don’t qualify for single family homes, or want to live a more affordable lifestyle. So there’s tons of people that actually find these products really, really respectable.

And the truth is we get a ton of responses whenever we post homes online. There’s a ton of responses. People will fight tooth and nail to live in these homes. Even more so than single family homes. I mean, I’ve seen plenty of realtors and even investors that post homes and don’t get the response that we get in our market when it comes down to mobile homes.

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