Why you should invest in mobile home parks?
Real estate investors have two options to choose from- either sit back and wait for the next real estate crash, or get creative and look for opportunities in the current market. For those that chose the latter, one, mobile home parks are an option worthy to be considered. At the first instance it may sound kind of peculiar, but believe it or not, mobile home parks are among the most interesting investment options within the real-estate industry.
Let us explore-
Lower cost per unit- The cost per unit is high when investing in large multifamily properties or single-family homes. However, mobile home parks allow people to jump in and get more units for less money. Most park owners own the land, not the housing units, which means that the investment is typically much lower in comparison to the number of units owned.
Low cost of repairs and maintenance- Since you do not own the actual homes in which your tenants live, the mobile home owner is responsible for the maintenance, repairs, and updates to their residence, not the landlord. While the mobile home park owner will still be responsible for park maintenance, it will most likely be significantly less than what they would pay for home maintenance. So, that’s a win on the expenses front.
Risk Diversification- Because mobile home parks enable investment firms to acquire more units for each investor dollar, the risk of loss is reduced. In other words, as the number of tenants increases, the risk is well spread out.
The Lofty demand- The demand for mobile homes in well-managed parks is increasing due to a variety of factors. While home prices are reaching historic highs, many Americans' incomes are stagnant and therefore, the demand for affordable housing is only increasing. More and more low-income Americans and retirees are looking to mobile homes as a way to remain homeowners.
Less Tenant Turnover- Tenant turnover is one of the heftiest expenses for a property owner. Cleaning their unit, finding a new tenant, and the loss of income during the vacancy can cost investor thousands of dollars per unit each year. However, when a tenant owns their own home and only leases the land, turnover falls dramatically. 75% of owners expect to stay in their Mobile Homes for at least 5 years, with a large percentage never selling. This means that there is little turnover and, as a result, little risk of losing tenants and having to go through the hassle of finding new ones.
Less Competition- The best kept secret in the real estate investment industry is mobile home park investing. This is perfect for investors looking for a good deal who don't want to compete with a flood of new investors, homeowners, and institutional investors for shreds in traditional real estate investments.