Last week’s blog entitled, “How a Lower Mobile Home HOAs Cost You More Money” got quite a bit of attention from those who read it. We have a question from one of our followers, Ms. Janice Carson, on Facebook who wrote to us directly stating, “Hey Mark, I don’t understand why a lower payment per month will equal more money over time. Mark, could you please explain the additional monthly payments that you’re referring to when owning the land attached to the mobile home?” Sure Janice, I would be happy to dive deeper into this for you and thank you so much for the question! For all you other viewers and readers out there, if you’re interested in me or one of our other team members going through this in detail, reach out to us on any one of our social media channels or in the comments below, we’ll be happy to bring clarity to any question that you have. So let’s jump right in, Janice. When looking at monthly carrying costs of a mobile home, I feel it is important to look at all the payments the owner will have to make each month instead of just looking at lot rent versus your HOA payment. The reason for this is because if we look only at the lot rent compared to the HOA, then, yes, HOAs, traditionally speaking, will come in quite a bit lower than that of your basic lot rent. However, doing this Janice, will not give you, the Buyer a fair comparison as to what amounts of money are being required for you to pay each and every month. When you have a lot rent payment, again generally speaking, the payment covers the usage of the land, the general park upkeep, the usage of all park amenities, your homesite’s lawn care, your water, sewer and trash fees. Some parks even offer basic cable as well in the lot rent. There are parks that sub meter the water so that you are responsible for paying your own water bill. These last features vary, but generally speaking, we see most parks in the area include all those bills within your lot rent. When you own the home and not the land, you don’t have to pay property taxes because you’re owning personal property. When you own the home and not the land, you have very limited insurance options as most insurance companies do not offer great insurance policies for homes where you do not physically own the land. Now Janice, this could be a pro or con depending on your budget and if you’re the kind of person who believes in having insurance for a rainy day or just fixing things on your own when they break. The last one that we’ll cover here is by far the most expensive and that’s when you own the home but you don’t own the land you do not have a large share purchase in order to move into the community. As mentioned last week, it is not uncommon in the Sarasota area to have the cost of a share be well over $80,000 in Sarasota County. When you own the land and you own the home, your HOA will traditionally be lower than if you were paying a lot rent. That’s pretty much a guarantee throughout Sarasota county. Most HOAs do not cover the water, the sewer, or the trash bill as that will be your responsibility. Most HOAs in the area won’t pay for your lawn care either. Lastly when you own the home and the land, you will owe property taxes because this is now real estate. Sarasota County property taxes, for reference, is just under 1% of the appraised value of the home. When you own the home and the land, you’re responsible for the large initial share purchase that we’ve discussed numerous times here. So, with all that said, lets go ahead and do the math! If we look at an average home and land value of $100000, it would be reasonable to see that with an average HOA payment in Sarasota County of $250, we would have to add another $100 on there for water, another $150 on there for lawn care, and about $85 per month on average for your property taxes. This is going to equate to about $585 per month with no insurance. $585 per month and you compare that to the $850 per month on the Sarasota County average for lot rent, we have about a $265 difference. Now, when we look at that $265 in savings and divide that into the average share price of $75000, we’re looking at 283 months or about 24 years of payments to break even on the number if you do not pay for the land in the first place. So Janice, the question is do you plan on living in your mobile home for 283 months in order to hopefully break even? If you do then great, fantastic. If not, I would strongly suggest looking at a mobile home on leased land and putting your $75000 to a much better use. This is Mark Kaiser with the Mobile Home Dealer and we help mobile home Buyers and Sellers get to a better place in life.
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