Manufactured Home Investing: Low-Cost Cash Flow and Owner Financing

Riccardo Vanorio (00:00)
With a basic job, you’re not gonna make it. You’re gonna need three income. And so you are forcing people into a situation that is hard to keep up, is that to make a living? Versus with my mobile homes, I can sell you a house for ⁓ the price is less than a car. And and you have a house. You are not talking about a trailer or a bad housing or a weird accommodation, it’s a house.

thirteen hundred square feet, three bedrooms, two bathrooms, and better built than a a regular single family.

Cody Crabb (02:02)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Ricky Vanorio with me. Ricky’s based out of Las Vegas, where he runs Good Affordable Housing and Good Mobile Homes Dealer. We were talking before the show about why manufactured housing is one of the most misunderstood corners of real estate and how he built an entire business starting with a free home off Craigslist. I’m excited to tell for you to tell that story to the audience because it’s a great one. thanks so much for coming on today.
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Riccardo Vanorio (02:30)
Hi, thank you very much for having me.

Cody Crabb (02:31)
Of course, yeah. So so ⁓ yeah, n nice meeting you too. So I’d love it if you could kind of give us the well, before we do anything, one of the first things you told me when I when we hopped on the call together was when you think when I think of manufactured housing, I’m probably thinking of it wrong. Like when it most people think of it as something different than it is. So c can you give me the basic like

What’s manufactured housing versus a mobile home versus a trailer? Like in my mind, these are all the same thing. So how are they?

Riccardo Vanorio (03:00)
Absolutely, yes. And this is a sort of a mistake, like ⁓ innocent mistake that a lot of people make all the time, because we all for simplicity or for short, we call them mobile homes, but they are not all mobile homes. because like in nineteen seventy-six, Congress adopted a universal code for building a pre-manufactured house.

And before 1976, there were no rules, no regulation at all. So with the term mobile home, we identify any modular, portable, or transportable house that was built without following the code. Versus manufactured house is built following that code that regulates literally everything in that house from the type of paint that you can use.

No more lead-based paint ⁓ allowed the materials that you can use, like the insulation, even like if you have a rail hand outside, because you know you you need to climb the steps to get into the house, the rail hand is regulated too. You cannot have the posts too much distance between the posts of the rail hand because a child can get his head stuck into it. And so we can yeah, we can tell that the safest product.

is manufactured housing. And the way I see it, because I’m in real estate as well, I I can tell you that they are way better built than real estate. Because if you think about it, for example, in a stick-built house in a single family, you have a leak in the bathroom, you need to break down the wall, the floor until you find the leak, and then you rebuild everything. Versus with a manufactured house, the plumber crawl underneath the house, fix the issue, and there’s no damage anywhere.

Cody Crabb (04:50)
Yeah, like a mechanic. Yeah.

Riccardo Vanorio (04:51)
Correct, you know, so they are way better. And the thing is, a manufactured house is the only one that can be permanently attached to the ground, permanently attached to sewage, water, power, and gas line, and converted to real estate, versus a mobile home cannot, because essentially we don’t know what how it’s been built. There’s no code that protect anything.

inside a mobile home. And yet we have beautiful products that are mobile homes, like you know, modular homes that are like super valid product, but you still don’t know what’s inside.

Cody Crabb (05:29)
Yeah, I I think no, that’s that’s super helpful to kind of give us a distinction there because I think anybody hearing the there’s there’s definitely a picture in everyone’s mind when they think of mobile home or or manufactured home. something else that I think people would say is, you know, where’s the money in that? You know, that’s I’ve we’ve heard over and over like that’s financial people say they’re a bad investment, don’t do it, you know, you have to you can’t do it.

But I I’m curio I mean, clearly you’ve you’ve found a way to make this work. So I’m curious what your opinion is about that.

Riccardo Vanorio (06:48)
Yes, absolutely. So, first of all, there is a huge, huge stigma around mobile homes or manufacture the housing because ⁓ this is coming from World War Two, where the product were like really poor quality. And the reason for that is that all of a sudden they had like thousands of orders and they didn’t have access to proper material, proper tools, didn’t have the experience. So obviously the final product.

turn out to be really bad quality. And that got stuck into people’s head that mobile homes or manufactured houses are poor quality. And today we are at the point that lending is a real issue for mobile homes or manufactured house that are not converted to real estate. There is a lot to talk about ⁓ mortgages and lending because you know you have a prime

Subprime, you have like ⁓ different type of lending, but none of them is in is in the matter of mobile homes if they are not converted to real estate. And even those that are converted, they have restrictions because if the house has been moved more than one time, the FHA guidelines say that it doesn’t qualify for an FHA product. So the that was the number one reason why my business thrive.

Because I was acquiring mobile homes at a very low price, fix them and sell them with owner carry formula. So I was able to put people in the house with very little down payment and monthly payments for like 15, 20 years, like 200, 300 per month. And with interest that makes double the money.

That I was asking for. Because if I sell a mobile home very cheap for $35,000, even at 10% interest rate over 20 years, I’m more than doubling those money. Plus, it gives me ease of life because essentially by selling three or four of them, I’m already making collecting enough money per month that pays my bills. So I can do more. You know, you see that that’s where the the majority of

the business are failing to identify the opportunity because they think, it’s crap. it’s junk. Nobody wants it. I have a buyer’s list. If I the only limit that I have is the inventory that is not available all the time. Because people need affordable housing and they need it all over the country. It’s not

Cody Crabb (09:19)
Now more than ever. I mean I’m I’m I I’m I’m a millennial, like I’m looking around at my friends and like everyone is a little bit like, I don’t really know what we’re gonna do. Like I I could easily see that being a a huge

Riccardo Vanorio (09:31)
Exactly.

And not only in certain states that are notorious to be too expensive, like California, New York, all over the country, there is a need for affordable housing. But this is like a sort of a catch 22, you know, like the liners blanketed when you pull it up, your feet get get exposed. All the the counties are and it’s also sort of prova propaganda, because the counties are promoting affordable housing, but they don’t want it.

Because manufactured housing do not pay the same amount of property taxes that a regular real property does. So when they have the same occupancy of the territory but pay one third of the taxes, they say, Hey, hold on. I need to provide schooling, you know, fire departments, all the services that I’m providing, and I don’t collect enough money. So they’re trying to stop the development of manufactured housing community.

And and I found like a a little shortcut. you just need to be a little bit outside of the major commercial ⁓ cities. Like if I go 20 minutes away from Las Vegas and I develop a community there, I can keep the price very low because the land will cost less, the development will cost less, and all I have to ask supposedly in return to my bias is that they have to commute.

twenty, thirty minutes to get to to Las Vegas. And everybody’s more than happy to do that because I’m giving I I’m providing housing at a fraction of a cost that is real estate right now. And it’s only getting worse because now I don’t know if you heard about Apex and all the development that we’re doing.

Cody Crabb (11:07)
Yeah,

I’d love to just hear your your perspective.

Riccardo Vanorio (11:10)
Yeah,

Las Vegas is growing so fast, so much that the price are getting the real estate price obviously ⁓ is getting out of control. ⁓ they are planning to develop new data centers in the desert because they have all the cheap land. They already bought like 85 ⁓ million dollars. there’s like 170 acres. And so all of these, ⁓ Las Vegas is becoming a sports hub.

Now we have the a football stadium for the Raiders. We are building a baseball stadium for the Ace. We have the Formula One. So all of this is attracting a lot of people that is moving to Vegas, which is great for the city to, you know, grow, but it’s not good for the county in terms of affordable housing.

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luck with that, you know. It’s the same thing like Los Angeles, San Diego, San Francisco. With a basic job, you’re not gonna make it. You’re gonna need free income. And so you are forcing people into a situation that is hard to keep up, is that to make a living? Versus with my mobile homes, I can sell you a house for ⁓ the price is less than a car. And and you have a house. You are not talking about a trailer or a bad housing or a weird accommodation, it’s a house.

thirteen hundred square feet, three bedrooms, two bathrooms, and better built than a a regular single family.

Cody Crabb (13:04)
Well I’d love to hear just just because I I’m very curious about this. Like give me a little bit of a like I’ve been in some I’ve been in some ⁓ trailers or or or ⁓ manufactured homes before. Yes. And the the the couple things that stick out to me, I wonder if you could kind of address this as like I’m acting as the audience, right? So one thing I always feel is like it’s really unstable. You know what I mean? Like if I’m walking, I can feel the everything kind of move a little bit.

So I’d love I’d love it for you to hear I’d love to hear more about that. And I’d also love to hear about the I’ve heard I’ve heard there’s other there’s other issues too, but that’s that’s one of them that I I have seen before.

Riccardo Vanorio (13:40)
Yes.

Okay. So first of all, ⁓ the code changed and is in constant evolution. Back in the day, they were allowed to use bricks to ⁓ elevate the house. Because you know, all the plumbing, all the electricals and all the stuff are under the house. So you cannot lay it on the floor directly, on the ground directly. It needs to be elevated. ⁓ back in the day they had the, like I said, concrete bricks to use it as a ⁓

sort of elevation for the house and those bricks with time were either breaking or getting the house out of leveling or when the the house is old what happened is that the subfloor needs to be replaced because it’s just a matter of age we’re talking about wood it’s not concrete so it needs to be replaced ⁓ otherwise you hear the screaking when you walk or the wobbly because it’s maybe out of the placing.

And you just need to replace the subfloor and that’s it. But today we have pistons, we have self-leveling materials. So the house still needs to be leveled by a professional, but the fact that the subfloor is wobbling, that that’s just the the replacement that needs to be.

Cody Crabb (14:50)
That’s

just a repair thing. It’s not like a that’s how they are thing.

Riccardo Vanorio (14:54)
Yes.

It it might be that those panels are just curved, so when you walk it feels that is unstable. It’s not. Yeah.

Cody Crabb (15:02)
Interesting.

Okay. Yeah, see, this is this is the kind of thing that I’m I’m curious about. So again, for for our listeners, I’d also love to ask, you know, our listeners oftentimes are kind of trying to find ways to maximize what they’ve already got. so my mind immediately goes to, you know, my my ⁓ my listeners often talk the they they have like a property where

It’s like a single family home and then the city is being more lenient with stuff like ADUs. Can you talk to us about maybe some options in that that someone could have with manufactured homes that maybe already has some properties or or land or something?

Riccardo Vanorio (15:42)
Yes, absolutely. So, first of all, the ADUs brought a new trend which is called tiny homes. And everybody got addicted to tiny homes. I want to get one. I don’t need 3,000 square feet and all this stuff. ⁓ as a ⁓ additional or the casida, that’s the the the way ⁓ is also get referred to. So the casida has requirements. Your lot needs to have a minimum square footage.

And the house cannot go over 40% of the main building that is in the in the lot. So if you have a house that is 2,000 square feet, your ADU, your tiny homes or casita cannot go over 800 square feet. And now there is a new because a lot of pressure has been made on the counties and say, hey, I don’t need a house, I just want one of these.

But I also want one for my daughter or for my my sister or whatever it would be. So now the requirements are two thousand square feet per tiny house. So if you have a lot that is 0.1 acres, it’s like 4,000 square feet, something like that, you can put two as long as you ask for the right permits and it’s not just an ADU, it’s gonna be like the main unit and the secondary unit. So you can put two equal.

⁓ units like that.

The difference between ⁓ being a dealer and not, at least in the state of Nevada, but I’m assuming California has very similar rules, you can only rent a manufactured house if you are a licensed dealer. If you are not, you need to hire a dealer to be the property manager of that manufactured house. Unless you are in a mobile home park where obviously it it’s under the sun.

You are you have a manager on site, so you are leasing the land where the house is sitting. And it’s basically the only difference. You own you still own the house, but you do not own the land. So for those that have a manufactured house that is sitting on private land, not in a community, not in a mobile home park, and they either want to sell it or rent it out. First of all, make sure that if the house is not converted, you can convert it to real estate.

Because in some cases you cannot. If it’s if it’s not possible to convert it, hire a dealer in your area that can take care of the renting. Or you can rent the house, not the land. You can sell the house, not the land. There are like multiple exit strategies because at that point, if you sell the house and you you’re still the owner of the land, you can ask your buyer to pay for the land, for leasing of the land.

In that case, you don’t have to change any toilet, you don’t have to do any repair because your tenant is not a tenant, like with all the the requirements or all the the specification of a of a tenant is the owner of the house. So he owns the house. And if something goes bad, it’s on him. It’s not on you anymore. And that takes the burden off your shoulders, essentially.

Cody Crabb (19:22)
Yeah, that’s really interesting. ⁓ well, th this has been super informative so far. I re I I have a few more questions for you as we’re kind of finishing up here. so my my instinct, my my first impression is this would be a great way for people to get started because this might be a much lower cost than just about anything else you could get into in real estate. Can you talk about like some actual maybe some some example numbers just so that I can get my head around how

how much something like this would cost.

Riccardo Vanorio (19:51)
Absolutely, yes. I am a used mobile home dealer. I’m in the process of becoming licensed for brand new mobile homes, ⁓ you know, at any manufactured housing as well. so the the thing is that the entry point, you can buy a manufactured house for as little as five thousand dollars. And then you’re still responsible obviously for the lease of the land because we’re talking about communities that might be

⁓ age restricted or open to all ages. What they call the senior community, there is a reason for that. And it goes back to ⁓ property taxes. a mobile home park that is for seniors only pay less taxes. But let’s say you buy you buy the house for $5,000, you fix it for another five, ten thousand dollars, you are into for $15,000. And if the park allows you, you can rent it to

a senior person that needs to be qualified by the community, but you are already cash flowing, you already have like a positive income for like $200, $300. And by being into for $15,000, it’s easier to recover those money versus getting into a mortgage, you know, risking your the back of your neck for $200,000 and make $200 is like really not

Not so appealing that that kind of situation. But ⁓ yeah, or you can fix it and flip it. So you are into for 15,000 and you sell it for 25. You see what I’m saying? ⁓ and for payments. So you you’re still collecting your money every month, but you don’t have to change any toilet again. So these are like a lot of good solutions. And in my dealership, I’m talking about the state of Nevada because I’m based in Nevada.

But I am also expanding to Arizona. So if you have anybody that is based in Nevada or Arizona, I can totally take them in my dealership, coach them, and you know, let them get started both with real estate and manufactured housing.

Cody Crabb (21:48)
This is fantastic. ⁓ one one other question I’d have for you though. so, you know, ⁓ picture the picture a first-time investor that’s like, well, I have 10 grand. I’m gonna go do this today. What’s a big mistake that you have seen people make early on in in manufactured housing that you would caution against?

Riccardo Vanorio (22:06)
Yes, absolutely. First of all, you need to be aware of what type of community it is, because an age restricted is the name itself that says there is a restriction on your market. So you have access to less people that can be qualified into that that community. And I know at least two investors that got stuck like that, and that’s when they reached out.

And I told them you knew me because I know that you saw my content, just reach out and we can work together. But then they they made a mistake and I just fixed it by I having one of my buyers keep taking over that that house. So that’s the number one. The number two is don’t buy anything that is too old. I’ve seen people buying single whites 1970. It’s before the code.

It’s a senior community, it’s too old, you don’t wanna get into that because

Cody Crabb (23:01)
So

what’s like the oldest you would go in twenty twenty six?

Riccardo Vanorio (23:04)
nineteen seventy nine it’s like really a stretch because

Cody Crabb (23:08)
So like

like mi like like mid eighties is still pretty old, but like could be okay.

Riccardo Vanorio (23:13)
Yes, mid eighties is still okay. you you want to possibly do a little more with the house to make it look good, but nothing before eighties. Yes, absolutely. Unless the it’s like really a multiple deal, like, hey, I need to sell my mobile home so that I can buy a condo or whatever. in that case, I I would do it. And I tell my agents too, don’t don’t go too too old because then you are stuck with the listing and you’re wasting time essentially.

So I don’t wanna I don’t wanna be in that spot either.

Cody Crabb (23:43)
Yeah, wow. Well that like I said, this has been really interesting. I think sometimes I think in real estate it’s so easy to forget that there are just so many different ways to do to do what all of us are doing that it’s just it it’s kind of fascinating sometimes to hear the the other ways that people have been getting into this. so the thank you again for for all that you’ve shared today. Thank you. if somebody is listening to this and they want they have questions or they

They want to learn more or they want to get involved. Actually, before we do this, I I you you mentioned something, which is that investors may have an opportunity to work with you. Can you tell us a little about that as well?

Riccardo Vanorio (24:21)
yes, absolutely. I’m working right now with five different investors, and what they do, they ask for ⁓ the deal itself, and I’m gonna charge the commission to buy a manufactured house and to sell the manufactured house. So I’m sort of a partner with them because I I’m making double the commission. I find the the deal for them, or if they are just looking for ⁓ cash flow or passive income.

What I would do, I would put them as a lender in one of my listings or one of my deals. And essentially they can collect the monthly payment that the buyer is making, protected by my dealership. So I can service the note for them. I can, you know, make sure that the buyer stays on track. And if anything happens, we help and facilitate the repossession of the house, the resale of the house. So we protect like.

a hundred percent our investors and all they need they need to do is just sit down, relax like the monthly payment from the buyers. That’s it. So we have many ways. Yeah.

Cody Crabb (25:26)
So if someone wants to learn more about that or they wanna get in touch or get involved, how can they how can they find you online?

Riccardo Vanorio (25:31)
They can find me in many ways. ⁓ the hub for all my activities is my first and last name, riccardovanorio.com or goodmobilehomesdealer.com

Cody Crabb (25:43)
Awesome. Well, thank you so much for for this this great advice and this great peek into this world. I really appreciate it. and listeners, thanks you thank you so much for sticking with us as well. Yeah, make sure you you give us a like, subscribe, all those things, and we’ll see you on the next episode. Riccardo have a nice day.

Riccardo Vanorio (25:53)
Absolutely.

You too, thank you.