A $30,000 mortgage at 8% for 15 years on a new home = $287 per month. The personal property tax is 1% in most states = $25 per month. The insurance is another $50 per month or so (totally depends on the state, deductible, etc.). That gives you a grand total of $362 per month. And that's on a brand new home. We typically have a range of homes (older used, repo and new) with the lowest price point around $4,000. The customer can get financing through 21st Mortgage on a note of $10,000 and up, which makes that $287 into around $100 per month, or pay all cash which makes the mortgage -0-.
But even given your estimate of $865 per month, that's still a great deal when SF medians are in excess of $100,000 and 3-bedroom apartments are $1,000+ per month. Again, what makes the MH business model work is high home prices and demand in the market. If you run your test ad and don't get 30+ calls in 10 days, then it's not a good market. We have parks in some markets that get 100+ calls per week. But they do that because the surrounding homes are $180,000 and the apartments $1,500 per month. Contrast between expensive and affordable is key, and without it you are doomed. There are mobile home parks in derelict parts of southern Illinois -- where the coal mines have shut down -- that compete with $40,000 median SF and $350 apartments and have no customers at all. They look like any other mobile home park (even the ones with 100+ calls a day) but they lack that one fundamental requirement: location. Those parks don't have to worry about economic cycles, as the only direction is down every day.
But I don't want to convince you of anything, just get the correct facts out there. If you prefer SF investing and hate the MH business model, then by all means invest in SF. At the end of the day, everyone has to invest in what they believe in. I believe in MH investing and have been doing it for 20+ years. But freedom of choice is what makes America great.
I will also add that I am no stranger to buying SF. I have bought many over the years for family members, the most recent 90 days ago. If you run the numbers on that house I just bought, you will see that it would be a lousy investment that returns virtually nothing after expenses. I always hear about SF investing as being great, but I've never actually seen it, except in cases where someone has purchased a home at a cyclical bottom (such as 2009 or so) and then held it until the market comes back. But even then, the gains are not that impressive if you look at the actual return over the period of time. I used to have a barber that raved about the farm he bought for $50,000 in 1950 and sold for $1 million a half-century later. It makes for a good story, except for the fact that the rate of return over 50 years was around 6%. Let's look at the house I recently bought for a family member and see if there's a way to make money with it:
Rent $500 per month
Purchase price $50,000 with $5,000 down
Mortgage on $45,000 for 30 years at 5% = $263
Insurance = $50 per month
Property Tax = $40 per month
Repair and maintenance = $50 per month
Total costs = $403 per month
Total profit = $97 per month
If you want to compare this to a $500,000 mobile home park, then just scale the numbers X 10.
Under that scenario, the SF portfolio makes $970 per month. Meanwhile the mobile home park can make this same amount in a simple rent increase of $40 per month x 25 lots (assuming the park is 25 lots at $20,000 per lot at purchase). So basically the mobile home park clobbers the SF right out of the gate. Then on top of that, the SF portfolio is worth $500,000, but the MH park is worth $620,000 after that first lot rent increase. And that does not even count the nightmare of trying to manage 10 houses spread out all over the place. The only way the SF can catch up is if home prices soar, not based on actual cap rates but the "pride of ownership" and stupid shopping of home buyers. But that's a huge gamble, and the risk is compounded by fickle SF mortgage markets and consumer sentiment.
For me, I'll take MH.