Should You Invest in Mobile Home Parks?
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If you're like me, you've driven past a mobile home park and wondered how profitable it is. It's true that investing in mobile home parks has become an increasingly popular option for real estate investors in recent years. While there are certainly some advantages to this type of investment, there are also some potential downsides to consider.
There are definitely some things I like about them. For one thing, they are recession resistant. I really liked the way mobile homes have performed during the last couple of recessions. They are very similar to multifamily real estate and self storage in that sense.
This is because they're in high demand, which is another thing I like about them. There is simply a high demand for affordable housing, which is also why multifamily apartment buildings are so good.
Mobile home parks are super affordable housing, and we have a shortage of affordable housing.
One of the biggest advantages of investing in mobile home parks is the relatively low cost of entry. Compared to other types of real estate investments, mobile home parks can be significantly cheaper to purchase, which can make it easier for investors to get started.
Mobile home parks are also pretty easy to manage, perhaps easier than apartment buildings. Because the park owner typically owns the land and infrastructure, they are responsible for maintaining the common areas and utilities. This can help to keep maintenance costs low.
It's also easy to find off-market deals when purchasing a mobile home park, as many of them are “mom and pop” owned. You can call and speak to the owner directly, and come up with the terms of the sale, possibly even negotiating seller financing.
So, these are all things I like about mobile homes, but what about the things I don't like?
First, it's difficult to outsource management. Typically, the manager of a mobile home park also lives there. That's fine until they move out and you have to find a replacement.
It can also be hard to find mobile home parks through a broker. With multifamily, I can build a relationship with a broker and they feed me deals. With mobile home parks, it's not the case.
Mobile home parks are highly dependent on the tenants who rent the homes. If tenants move out or fail to pay rent, it can significantly impact the investor's cash flow. And it can be more difficult to find new tenants for mobile homes than for apartment buildings because home parks tend to have a negative reputation among the general public.
The biggest downside to mobile homes for me, however, is that I don't like how they make me feel and this is important.
When I walk through a mobile home park, I don't feel comfortable.
It's a personal thing and you might not feel the same way, but I know they're not for me.
So mobile home parks can be a strong investment. They're high cash-flow and perform well during recessions. Demand for them is on an increase, and they're simple to manage.
What I don't love about them is that you have to self-manage them. And I don't like the way they make me feel.
So, should you invest in mobile home parks? They might be right for you, but I still say the best investment is apartment buildings.