Simulation: a fictional property for practice.

A 1974 mobile home on its own lot, for $55,000

It’s cheap, it’s on its own lot, and it was built two years before the HUD Code. What are you really buying?

A fictional home bought through a listing agent. Zoning and titling rules vary by county and state.

• Price: $55,000
• Home: 1974 single-wide, 2 bed, 1 bath, 720 sq ft
• Lot: Quarter acre with water and sewer; similar empty lots sell for about $40,000
• Your plan: Rent it for about $1,100 a month

Mission 1: Can you or your future buyer get a loan?

Which is closest to right?

• Probably not a normal mortgage. Homes built before June 15, 1976 weren’t built to the HUD Code, and most mortgage programs require it
• Yes, any lender will treat it like a house because it’s on its own lot

HUD’s construction and safety standards apply to homes built on or after June 15, 1976. Older mobile homes are harder to finance and insure.

Mission 2: What else would you check?

Pick all you’d check before buying.

• Whether you can get insurance, and what it costs
• County zoning: whether the home can stay, and whether a newer one could replace it
• Wiring, roof and plumbing, with an inspector who knows older mobile homes
• Nothing: at $55,000 it can’t lose money

Much of the value here is the lot. Price the home as if you might replace it.

Mission 3: What are you paying for?

• Similar empty lots: About $40,000
• Price: $55,000
• What you’re paying for the home: About $15,000
• Removing the home if it can’t be saved (example): $5,000 to $10,000
• Rent, if it can be rented safely: $1,100 a month before costs

If the home needs to go, you paid about $15,000 plus removal for it. Value it as land plus what the home can safely earn.

At $55,000, what do you do?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.