Saturday, April 14, 2012

Mobiles and Manufactured Homes - Pad Rent or Lot Purchase?

While adding to the purchase price the acquisition of a lot in a mobile home park can be a wise decision. Here's why.

Chilliwack Rainbow Estates

Chilliwack Mobile Home Park

After I wrote the article on Mobile and Manufactured Homes in Chilliwack* I wondered if I was missing an important financial piece to the real estate decision making process.  Pad rents can be expensive how would these compare against a lot purchase in a mobile home park such as Baker Trails in Chilliwack?  I asked Wyatt Tunnicliffe of Dominion Lending Centres a mortgage broker to give me some advice using the Median prices of both types of Chilliwack* purchases. This is what he came up with:

Mobile on Pad
    • Purchase Price :  $80,950
    • Minimum Down Payment:  $4,048
    • Amortization:  25 years
    • Interest Rate: 3.39% on a 5 year term
    • Monthly Payments: $389.94 + $470 pad rent = $859.94
Mobile on Land

    • Purchase Price:  $158,900
    • Minimum Down Payment:  $7,945
    • Amortization:  25 years
    • Interest Rate:  3.39% on 5 year term
    • Monthly Payments:  $765.42 + $85 strata = $850.42 + property taxes if applicable
While there is not a lot of difference between the two options, $859.94 Mobile on Pad versus $850.42 Mobile on Land, there are some significant differences that would suggest, that if you have the downpayment, the Mobile on Land to be the superior of the two options:

  1. For almost the same money you will be buying an interest in land.
  2. Purchasing an interest in land, Mobile on Land, eliminates the uncertainty about future mobile home park redevelopment and the eviction notices that are a threat to continued mobile pad rental usage. As a property owner, you would have some say in any redevelopment plans.
  3. You will have a say in the running of the Mobile on Land park whereas otherwise you would have to abide to Pad rental rules and regulations.
  4. More lenders will be available for financing because owning land provides better security for them the result for the borrower might be a better interest rates due to competition.*
  5. It is essential that you understand the type of land interest being purchased is it in fee simple or is it a long term lease - you will need a Realtor® to help you.
*Note:     When calculating payments on mobiles/manufactured homes it is important to know that all lenders will only amortize the loan over the remaining economic life of the unit.  The analysis uses 25 years assuming that the home is relatively new.  If the home is older and an appraiser determines the home has only 10 years of economic life remaining then the payments will balloon ($776.43 + $470 Pad for instance).  Often when financing mobiles on pad with a depreciated value a secured note loan rather than a mortgage is recommended much like a car loan.

*Note:    The key in any purchase is finding the right property at a price that makes sense for you and your family.  The use of a Realtor© and a mortgage broker is the right team of professionals you will need for this investment.


Thank you, Wyatt Tunnicliffe of Dominion Lending Centres for you analysis and assistance in preparing this article.  I should note that a number of my clients have used Wyatt as their mortgage broker all have been pleased with the results.


Stephen Mullock RI
is an award winning full-time real estate specialist with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) of Royal LePage Wheeler Cheam Realty for experience, local knowledge and friendly service you’ll be happy you did.

16 comments:

  1. Beautiful, makes me think to get one. It's affordable and practical. Easy to build and can be transported.

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  2. These are as awesome as the ones we saw with some estate agents in liverpool. They had us looked for the perfect house in the perfect subdivision near LV. The price was pretty negotiable.

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    1. I would go for the mobile on it's own land , the writer forgot a very important point , for some reason the landlords ( some not all ) in today's world are complete and utter turds who's only interest is money .They don't give a dam about the park or the tenants that pay them a huge amount of money year after year with all the increases our government has given them. If you are going to rent the lot do your homework and get to know, ask around, about the guy that is going to take your money

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  3. I prefer mobile on pad because it is affordable than the mobile on a land. There is a lot of difference but I think I can benefit from the first one.

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  4. can't say I got any 3% rates on my purchase. TD gave me 5.14% and a 15 year amortization. Land/mobile purchase together. bahh.

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  5. Kristina sorry to learn that you couldn't get a better rate than 5.14%. The article was written a year ago so perhaps rates have climbed since then. Congratulations anyways on your new home I hope that you have many happy years there.

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  7. What irks me to no end is, property taxes should be included in the pad rent. Somehow, someone came up with the idea to double ding trailerpark owners. We don't own the land and we're not paying tax on the trailer itselt. You don't pay tax on your home every year, you pay tax on the property that your home sits on. Jeez! So how come this is a legal scam???? I'm sick of paying taxes for a piece of property that will never be mine. I thought that was the whole purpose of pad rent to begin with. After all, I live in a shithole that never gets maintained and Trevor Linden (owner) gets about 400,000 profits every friggen year off our park. SCAM SCAM SCAM!!

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    1. I have to admit, Paying over 250./m for pad rent is ludicrous!!! Maintenance fees for basically snow removal and garbage removal should included in that fee. A SMALL pad should not cost over 30k.!!! and that is being generous!!! Shame on FV property assessment pricing some land over 3 times it actual value!!!! Greed- plain and simple!

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  11. You said +85.00 for strata fees if you buy the land...Wrong... In Baker Trails it is 200.00 on owned land for the trailers in Baker Trail and with the septic problem there will be a levy tax to pay the cost of new septic. Also those mobile homes in Baker Trail were going for a price of $70,000 and up for single & $90,000. for double in 2014 and then with the greedy real estate they have jumped to all over 120,000 to a silly 200,000.
    I wanted to buy one and what was sold to a realitor (a forcloser with CMHC) tossed in a new roof & little paint & touch up with clean up on yard and within 4 months put it on the market for 199,000 !! check the public knowledge amount they paid from CMHC....64,000.00. My point is this happened to me twice in that park by realtors sooooo anyone who buys these places are paying 199,000 for the same OLD trailer at a BIG gain to the realtor. Now lets see if they print this True & real account on Baker Trails REALTORS.!!! Shame on you...

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    1. Hey anonymous above....You are dead wrong about Baker Trail Village. We bought in here 22 years ago and we paid $139,900....no $90,000 here. It is a beautiful park, and there is no pad rent. You own the land. We pay $200 strata fees a month and that covers absolutely everything. So forget the lousy info you got out of nowhere, and get your facts straight before shooting your mouth off.
      there are some older mobiles here but there are some real gorgeous places as well.

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  12. With regards to the comments posted June 21, 2016 there are two items that I wish to clarify; 1. this post was written in 2012, and is dated with respect to prices, pad rents and strata fees, but in general raises an interesting discussion about where and what to purchase; and 2. I have made no purchases in Baker Trails and further wish to add that Realtors are as different as neighbours might be to one another, whether one is good or bad depends on the viewpoint.

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