A few months ago, I heard a presentation about mobile homes from Franco Perez, a member of the Santa Clara County Association of Realtors. His presentation really opened my eyes and changed my perception of the amenities that a mobile home can provide.

I had family members living in mobile homes, mostly in the Brentwood area, that were simple in design and the mobile home park itself had no significant amenities. By the end of Franco Perez’s presentation, I had a whole new idea of ​​what life in a Santa Clara County mobile home could be like. Surprisingly, some of these units had design features and details comparable to a $1.2 million Silicon Valley home, but at a much lower price.

Photo courtesy of Lawrence Gillen.

I wanted to learn more about mobile homes, so I approached a realtor. Lawrence Gillen of Compass for learning on all things mobile homes.

Lawrence has been selling mobile homes for over 15 years. The first thing he shared with me was that the terms “mobile home” and “manufacturing home” are used interchangeably. After 1976 building standards rose and the term “manufacturing houses” became a bit more common. In this article, I will use the more common term “motorhome”.

When you buy a mobile home, you are only buying a unit. The land it sits on is owned by the mobile home park provider and you are responsible for paying the rent for the space.

There are basically three types of mobile home parks: family parks have no age limit, senior citizen parks have an age limit and usually require at least one owner to be over 55, and resident-owned or co-op parks are parks in which mobile home owners actually own a financial stake in the park. The advantage of cooperative parks is that it is very unlikely that the park will ever be sold.

Gillen told me that the average rent for a room in San Jose is about $1,100 a month. Most parks have clubs and may also have other amenities such as a pool, spa, gym, tennis court, RV park, barbecue area, playground, and more. He recommends that you try talking to existing residents to get their feedback on the park, and also try driving through the park at different times of the day to make your own assessment of whether the facilities are adequate and if the park meets your expectations.

Santa Clara has five cities with rent stabilization ordinances for mobile home parks: Gilroy, Los Gatos, Milpitas, Morgan Hill, and San Jose. In cities with ordinances, annual growth is capped and tied to the consumer price index. Here existing mobile home rent stabilization ordinances in Santa Clara County:

City Permissible annual increase in rent for the premises Maximum magnification (limitation)
Gilroy 80% CPI 5%
Los Gatos 100% of CPI or 3%, whichever is greater 5%
Milpitas 50% CPI 5%
Morgan Hill 75% CPI eight%
San Jose 75% of CPI or 3%, whichever is greater 7%

Like any major purchase, buying a mobile home comes with its own set of nuances. First, there are only about five major lenders that offer financing. Be sure to work with a professional who specializes in this area of ​​finance. Financing terms are traditionally shorter than the standard 30-year mortgage that most homebuyers rely on. Mobile home financing terms are usually 20 or 23 years. Buying a mobile home does not require mortgage insurance, so it saves money. Closing costs are also significantly less than the costs associated with buying a traditional home.

When purchasing a mobile home, you must also obtain approval from the mobile home park. Most mobile home park providers require owners to earn at least three times the cost of housing. For mobile homes, this includes credit for the mobile home itself, rent, taxes, and insurance.

Mobile home park Chateau La Salle. Photo courtesy of Lawrence Gillen.

Mobile homes are not considered real estate, but you can still profit from your purchase because mobile homes are a scarce resource in our area and the demand for them is constantly growing. If you’re preparing for your next move, you might consider buying a mobile home instead of renting an apartment.

For example, renting an apartment for 10 years for $3,000 a month costs at least $360,000, and if you factor in rent increases over time, you expect to spend over $400,000 out of pocket.

While a single-family home can cost $200,000 to $300,000 over the same 10-year period, a mobile home can still net you $40,000 to $60,000 in the same amount of time. Today, you can own a very nice three-bedroom, two-bathroom mobile home with modern amenities for about $400,000 and still be able to write off the interest on the loan. On the other hand, you will not have tax benefits and the opportunity to earn on rent.

San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Realtors Association, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. His column is published every fourth Thursday of the month. Contact Neil at [email protected] or follow @neilvcollins on Twitter.

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