Is a Monthly Lot Rent Better for Senior Homeowners?

For senior homeowners looking to make the move to Central Florida, look no further. In this article, we’ll focus on why a manufactured home with a monthly lot rent can be a great choice for retirees.


If you’re a younger homebuyer wanting to move to Florida, it may be a better option to invest in real estate. However, for retirees, a manufactured home with a monthly lot rent in a senior community in Central Florida can be a more viable option. Many people claim that the prices of lot rent are not worth it. Well…let’s find out!


What is a monthly lot rent?


A monthly lot rent is a price you pay per month for the land that a mobile or manufactured home sits on. In this contractual rental or lease, you’re required to pay a monthly fee to have your mobile home on the lot, reside in the community, and utilize the amenities.


Depending on the community, these payments can be anywhere from $300 to $1200 a month in Central Florida. Those with a higher monthly lot rent are typically in sought-after communities with tons of amenities and located in popular areas.


Compare Payment Options


For seniors living on a fixed income, it’s important to consider the right payment option for their property. Depending on age and health, it’s critical that they review these mortgage options – a 15-year, or 30-year fixed mortgage. A 15-year fixed mortgage provides sufficient savings for the period of the loan, helping you save for retirement. A 30-year fixed mortgage will have steady interest rates, spreading out the payments while keeping more of your income.


Keep in mind that the longer the term, the more you will pay in interest over time. On the other hand, if you purchase a previously lived-in manufactured home, you will have a much lower amount to finance which will result in lower monthly payments. If you can swing it, you can purchase your home outright. Both scenarios provide greater financial security, as the cost of living will be much lower each month.


Some may have been able to save more for retirement and can afford the monthly payments for shorter-term mortgages. But for others, this is not a viable option. This is especially true if your FICO score is under 740, as these rates and payments will be even higher.


Manufactured homes do not incur property taxes but do require some taxes in Florida depending on the situation. If you own your manufactured home but not the land it resides on, you will pay an annual license tax which is considerably less than property tax.


HOA Fees


If you purchase a site-built home, also consider any potential HOA fees that can affect your budget.


HOA fees are regular monthly or yearly fees that are charged by your Homeowners Association. These amounts may vary greatly depending on the location and exclusivity of your property. Certain homes require an HOA membership, but others can be optional. Some HOAs will include access to amenities, while others will simply impose rules and regulations on the appearance of your home or lawn. (Read: If you don’t cut your grass when it gets to a certain length, they can send someone out to do it and fine you an exorbitant fee.)


It should be noted that most manufactured home communities do not charge an additional HOA fee. Access to all amenities, as well as some utilities such as lawn care & irrigation, sewer fees, and trash pickup, are already included in your monthly lot rent.


Home Maintenance and Amenity Costs


When you move into a manufactured home community, you won’t have to perform maintenance on every surrounding feature of your home. Chores like cleaning the swimming pool or even cutting the grass (if lawn care is provided with your lot rent) are taken care of for you. This can be a great option for seniors who are looking to cut down on maintenance tasks.


You will, however, have access to a slew of amenities that would normally require outside memberships and fees. Rather than joining a country club or paying greens fees, many manufactured home communities in Central Florida have on-site golf courses, tennis courts, pools, and more. They also offer access to the community clubhouse and planned social events throughout the year.


The Bottom Line


It used to be that manufactured homes depreciate in value like automobiles. However, the times have changed. Now, both real estate and manufactured homes are appreciating in value over time.


While manufactured home communities may raise their lot rent over time, it is not always done on a yearly basis. The monthly lot rent is determined by the current market value and is usually increased to cover inflation. A fixed-rate mortgage will not change without refinancing, but your property taxes and HOA fees can increase.


In the long run, when all the math is done, the costs end up being about the same. Between financing charges, property taxes, and HOA fees, you could pay more monthly for traditional real estate, but you will own your home and property at the end of the mortgage term. It is truly an investment, and at this stage in life, it might not be something you are interested in. As the saying goes, “You can’t take it with you.”


A manufactured home in a community with monthly lot rent, however, can offer lower monthly expenses and more financial freedom to enjoy retirement.


If you need more help finding your ideal retirement community in Central Florida, give us a call today to schedule a viewing of the community and home of your dreams.


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