Property investors are constantly seeking distinct ways of making money. For instance, multifamily properties, single-family homes, and mixed-use investments are popular with the masses.
Mobile home park investments have increasingly grown popular because of the related benefits. When you buy a mobile home park, you’re purchasing land that’s been zoned for renting as separate lots for various mobile homeowners.
You’ll then lease the lots for a yearly or monthly fee. While you’ll be the owner of the mobile home park, the residents will own mobile homes. If you’re contemplating this investment, reputable firms like Midwest Park Capital offer this list of convincing benefits.
Why live in a mobile home?
As the middle and lower class families continue facing financial pressure, increasing demand for affordable housing makes mobile home park investments, attractive housing options for those who can’t afford conventional homes.
Due to various factors, the demand for these homes is continuously increasing, and while home prices are increasing to historic levels, numerous Americans aren’t experiencing an increase in their incomes. Therefore, there’s a huge need for affordable housing.
Lower Unit Cost
When you invest in single-family homes or huge multifamily properties, you’ll discover the unit cost is high. However, mobile home parks or MHPs allow you to acquire extra units for less money.
When you buy a rental property, you purchase a physical asset that you can rent to a tenant. When it comes to a mobile home park, you purchase land that you could rent to a tenant who can position his or her mobile home on the land.
Since you’re paying for an existing structure when purchasing a rental property, the unit cost is higher than the price per land unit in a mobile home park. Therefore, MHPs provide the lowest investment cost per unit with possibly elevated risk-adjusted returns.
Exclusive Deals Off-Market
Investors can partake in buying at a steep discount to the costs one should pay for mobile park homeownership via a private equity fund. You can secure the deals directly from owners who haven’t maximized their investment’s net operating revenue. Acquisition negotiations occur depending on the existing net operating revenue, which can often increase briefly after closing on the property.
Lower maintenance and repair costs
One advantage of this investment is that you don’t need to deal with contractors. When investing in multifamily properties and single-family homes, dealing with contractors can be a hassle. However, when you don’t own the homes inhabited by your tenants, the mobile homeowner is responsible for the repairs, maintenance, and upgrades.
Although the owner of the mobile home will still need to account for the costs associated with the park’s upkeep, the expenses will most probably be considerably less than what they’d pay for the home’s upkeep.
Decreased Tenant Turnover
Tenant turnover is a huge expense for a property owner. Cleaning the unit, the need to locate a new tenant and the lack of revenue throughout the vacancy could take thousands out of an investor’s pocket annually. However, when a tenant is the homeowner and just leases the land, there’s a dramatic decrease in tenant turnover.
In this case, there’s minimal risk of tenant loss and going through the hassle of locating new ones. When a tenant decides to vacate his home, the MHP owner might purchase a new asset and sell it to a new tenant after some upgrades. The moving penalty also gives you increased leverage in terms of increasing lot rents.
Several owners of mobile home parks aren’t investors with a lot of capital. Rather, most owners aren’t professional landlords. This permits you to buy at reasonable costs and then make upgrades that will draw long-term tenants. This investment is great for investors who don’t want competition with many investors seeking conventional real estate.
How to Locate Mobile Home Parks
These investments are highly localized, and most investors need a strong knowledge of the region in which they’re looking to invest. It can be difficult to find good data on the parks, and identifying indicators of a probable sale is important. Various resources can help you find parks listed off-market or for sale. Some of the resources include:
Using Listing Platforms and an Agent
An easy way of investing in these mobile homes is through the MLS and local realtors. Some realtors in your locale might know of expired listings or properties that aren’t listed. You could also conduct some research and reach out to park owners locally. Banks also know those looking to sell parks, so you could contact them.
With their numerous benefits ranging from low maintenance and overall affordability to high returns, you want to consider investing in mobile home parks. If you’re looking for a place to begin, Midwest Park Capital is ideal.