Rent-to-own mobile or manufactured homes may seem like an affordable route to homeownership. But the reality is that rent-to-own mobile homes add more risk to an already dangerous business model. Lower-cost alternatives can likely provide a more profitable and clearer path to homeownership.
Key takeaways
Both rent-to-own and mobile homes are high-risk alternatives to traditional homes.
Rent-to-own agreements apply only to the home, not the land it's on.
Mobile homes are often classified as personal property and can't be financed with a mortgage.
Clever Real Estate can match you with experienced real estate agents who can give you market-specific advice and tips.
Why mobile rent–to-own homes are a bad choice
Low success rates
Rent-to-own agreements tend to be expensive in the long run and may not even work out for you. We found that as few as 50% of rent-to-own customers can actually purchase the home they had been renting.
The success rate gets even lower for mobile homes, which are already considered poor investments. Adding on a costly rent-to-own agreement only further reduces the returns.
Less appreciation
Mobile homes have one-fifth the value of a single-family home, and while they don't lose value, their value depends more on their location than on factors like number of bedrooms. That may not be an issue by itself, but the fees you'll pay as part of a rent-to-own agreement can make the total long-term cost much higher.
In addition, the land on which you have your home tends to have higher value and a steadier appreciation. Without the land purchase, the mobile home may not rise in value enough to justify the high costs of the rent-to-own agreement.
Warning
Read up on who owns the land where you want to buy. In recent years, renting or owning mobile homes in privately owned parks has led to rising rents, hidden costs, severe restrictions on making modifications to the home, poor living conditions, and the potential for being evicted — all without due process. [1]
Harder to sell
Even if you end up owning the property, reselling a mobile home is often more difficult than a traditional home. Roughly half of all loan applications for the purchase of manufactured homes get denied, compared to just a 7% rejection rate for site-built homes, according to PEW Research.
The people who are interested in buying often have difficulty getting approved for financing. So potential buyers have to explore non-traditional, expensive financing options, which can complicate or stall the home sale process.
Related reading
The New York Times. "Investors are Buying Mobile Home Parks. Residents are Paying a Price." Accessed March 6, 2023.