Does A Mobile Home Have Any Equity?
Does a mobile home have any equity? It’s a crucial question, whether you’re buying, selling, or simply curious as to whether purchasing a mobile home is a good choice in the long run. Today we’ve put together a comprehensive guide on mobile home equity that will hopefully answer all those nagging questions! There are many ins, outs, ups, and downs to home equity, so buckle up.
What is equity?
First, let’s do a quick review. What is home equity? For anyone who’s not a real estate wizard, understanding equity can be a little confusing. Sure, we get the general idea of the word, but when you’re investing in a mobile home, it’s good to have a solid understanding of the term. Ready for it? Here it is. Home equity is the difference between the home’s market value and what the homeowner still owes on it.
So, on the most basic level, that means that any cash that was paid upfront on the home is considered equity. Investopedia puts it this way, “Home equity is the portion of a home’s current value that the owner actually possesses free and clear.”
Of course, this is extremely basic. There are other things that factor into equity. We’ll get to that in just a moment. Before that let’s consider our initial question.
Does a mobile home have equity?
Sometimes. It depends on (1) how old the mobile home is and (2) whether the homeowner is doing anything to increase the equity (are they letting the home fall into ruin, or are they making improvements?). There are also other factors. No matter how well the homeowner keeps their mobile home looking and running, there’s market trends and property situations to take into account.
Since mobile homes are not usually affixed to the land they’re placed on, they’re considered mobile (obviously!), and buying and selling them is similar to buying and selling a car. You can’t sell a car for more than you got it for ten years after you bought it new. Unlike a traditional home, mobile homes usually depreciate in value and, well, the word equity just isn’t worth much after that!
So sometimes equity isn’t even applicable to the situation. However, there are many different circumstances. If the land a mobile home is placed on was leased to the homeowner, there won’t be nearly as much equity when the owner goes to sell it as there would be if the homeowner also owned the property. A mobile home and a piece of land that come together are far more valuable to a potential buyer.
Making sure your mobile home has equity
Does a mobile home have any equity? It’s partly up to you! For example, if you were able to buy a brand-new mobile home and place it on a piece of land all your own, there you go! Equity. Now, since mobile homes depreciate, this doesn’t mean you can rest completely easy. Mobile homes are perishable. They don’t stick around forever if they aren’t taken care of, updated, and have a modest amount of curb appeal.
Your best bet? Keep an eye on design trends. Keep your mobile home updated. Those handyman projects you’ve been meaning to tackle for years? Right before you put your mobile home on the market, make sure all those boxes are ticked. And last but certainly not least, consider moving your mobile home to a piece of land.
A few more equity tips that can make or break
There’s always the unknown. You can’t know for sure whether the mobile home you’re buying will have any equity in a year, two years … or ten years. Sometimes a mobile home owner’s equity climbs unexpectedly because suddenly everyone is moving to their area. Buying a mobile home in a hot area isn’t a guarantee it’ll still be a hot area when you want to sell it. Even buying your own lot is not a magic solution. It depends at least partially on market trends and depreciation.
Making the best possible choice
Being discerning and making the best possible choice with the information you have is the number one best way to make decisions. When it comes to decisions that have to do with equity, there are a million different variables. Do mobile homes have equity? Yes, usually they do at first. You can help your equity out by paying off your loans, making long-term decisions when it comes to property and upkeep, and keeping an eye on market trends.
Ultimately, it will be your decisions that will give you some equity (or not) when you eventually sell your home. Thankfully mobile homes are not so big an investment as a traditional home, and the decisions are less risky. And if you make the best possible choices, you’ll be set up for success! If you want to learn more about depreciation, check out Why Do Mobile Homes Depreciate In Value?