Although the development had a homeowners association, the association lacked the will to pass and enforce rules that keep yards and homes in good condition, so people living there found it more difficult to sell their homes for what they owed on them. In Dan and Ashley’s case, they wanted to move to a bigger home, but they had financed the mobile home and their original closing costs with a zero down program.
When the mobile home’s value didn’t go as high as the developers had promised, they ended up owing more than their home was worth. As a result, they had to stay in their mobile home and hope they could eventually pay their mortgage down to a point where they could at least break even when they sold.
If, instead of buying a lot in a mobile-home park, you decide to place it on a rented pad, be aware that you become subject to all the reasons you didn’t want to be a tenant in the first place: The landlord can raise the rent and there’s little you can do. Moving a manufactured home to another lot can cost you thousands of dollars.
You have no control over the lot and the rules the landlord imposes. You’re financially marking time and not building equity. Why pay a monthly pad fee when you could be building equity in your own lot? If the landlord decides to sell the property to, say, a developer who wants to build an apartment complex, you will be required to leave, possibly receiving a below-market offer for your home or having to abandon it completely.
The bottom line is that whether you buy the lot or rent a pad, if the community or area deteriorates, you may not be able to sell. If you’ve financed the purchase price and loan costs of your mobile home and the values drop, you could end up owing more than the house is worth. This isn’t to say that taking advantage of these finance programs is bad; it’s just that you have to be more location conscious and do your homework before committing.
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