The current housing market is competitive. But there’s one untapped area for new investors that could bring low-risk returns. New and aspiring real estate investors may have a hard time acquiring more traditional investment properties. Single-family homes get snapped up by homeowners who don’t want to wait for prices to go back up. Multi-family homes get eyed by investors with more experience and deeper pockets. All the while, housing costs keep climbing up. What’s a new investor to do? You could wait around for the next housing crash, or you can get creative and find new areas for investments.
This is where the humble mobile home park comes in. It’s not the most glamorous investment, but it doesn’t need to be. This type of real estate investment can be just what your portfolio needs. You can get all the returns (and more) that traditional investments offer with significantly reduced operating costs and reduced risk. Best of all, mobile home parks aren’t on the radar of more sophisticated investment firms – yet.
Why Mobile Homes?
While they may still have a bad reputation as living spaces, mobile homes have actually come a long way from the typical perception of a “trailer.” Also called manufactured homes, mobile homes are first built in a factory and assembled at a secondary location. Contrast with traditional homes, which are built completely on-site. Manufactured homes are cheaper to build, as a result, have more consistent construction, and are completed with fewer delays.
There are several benefits to investing in mobile home parks you may not be aware of:
Due to local zoning laws and gentrification, new mobile home parks are harder to come by. Communities aren’t too keen on building new parks and favor more traditional real properties. And in the face of rising home costs and more of the “baby boomer” generation reaching retirement, the demand for low-cost housing is going up. As a result, there’s a growing demand for mobile homes and space in a mobile home park.
Mobile homes are typically owned by the tenant, not the park owner. The owner is only responsible for the land the homes sit on, roads, and common areas such as clubhouses and other amenities. This means you wouldn’t be responsible for maintaining the homes in your park. Your maintenance costs are drastically lower than if you were to own a multi-family unit.
Turnover can be one of the biggest expenses for a real estate investor. Between finding a new tenant and preparing the property, high turnover can eat into one’s investment quickly. But with a mobile home park, turnover is less of a concern. If you own a multi-family home, you need to fill vacancies quickly or lose money. But mobile homes attract a different kind of tenant.
The tenant you’re more likely to encounter is older, likely retired, and wants to live a quieter life. They aren’t as interested in moving around. In fact, moving a mobile home gets costly fast. Your tenants could pay 5-7 thousand dollars just to move to another park. For this reason, the vast majority of mobile home tenants opt to stay put for years or indefinitely. This means you’ll have fewer vacancies to fill, and will be in a better position to raise lot rents if needed.
Mobile home parks aren’t a hot investment niche at the moment, so you’re less likely to be competing with big investment firms for your next property. Additionally, most parks are owned and operated by smaller, independent landlords. This means you’re in a better position to buy a park at a reasonable price, make some small improvements, and use the added value to attract new tenants.
Investing In Mobile Home Parks
So you’re convinced that investing in a mobile home park is the next move for you. Excellent! But you have some homework ahead of you first. No investment should be made without due diligence, and mobile home parks are no exception.
How To Get Started
Because mobile home parks are localized operations, you’ll want to be familiar with the surrounding area of the park you choose. Most owners will live near or even in the mobile home park. Pay a visit to the park you want to buy, and talk to the owners. Get a feel for what you’re buying and how you’d like to add to its value.
When it comes to financing, there are some differences in securing funding from other real estate ventures. Every financial institution will have its own policies, but they will often be along these lines:
- There may be pad minimums, or spaces available for tenants. 15 is a common number here.
- You may also see a maximum requirement for homes per acre. Less than 10 is a common preference.
- Lenders often prefer paved roads to gravel.
- There may be requirements that tenants’ homes be skirted so that tongues and hitches don’t show. Some lenders may require the homes to be permanently installed.
- Amenity packages are favored by lenders. Laying out a plan for added amenities can make your proposal more attractive.
- Lenders will also ask for detailed expense reports for the past few years. If you’re buying a park from a mom-and-pop operator, this may be a challenge.
Finding Investment Properties With ProspectNow
Once you decide you’re in the market for a mobile home park, ProspectNow has you covered. The platform’s massive database shows properties in every county across the country. The trial access will show you all properties available in one county – this is an ideal option if you’re looking for parks local to you.
But ProspectNow doesn’t just show you what properties are currently for sale. The likely seller/likely refi algorithm will also show you properties deemed likely to sell in the next 12 months. This algorithm uses data analytics and machine learning, gathering information from various factors. Making use of this likely seller/likely refi algorithm gives you a chance to find mobile home parks before they’re on anyone else’s radar, and reach out to prospective sellers before they’ve listed the property.
Once you’ve found your next possible mobile home park investment, it’s time to contact the sellers. ProspectNow gives you the chance to do this right through the platform, providing all the contact information you need and email and postcard templates to make the best first impression.
Ready to find your next investment property? ProspectNow has been in the business since 2008, providing a trustworthy platform for real estate investment, sales, and marketing. The data you’ll find here is more expensive than on other platforms, and unique data analytics help you find hot properties before your competition. ProspectNow will help you close more deals than ever, which means more money in your pocket. Start your risk-free trial today.