Are mobile home parks a good investment?
Which is the best option for you? In this post, we'll cover mobile home parks vs multifamily properties and the pros and cons of both.
You've probably driven past mobile home parks and thought, My gosh, they're not much to look at, but maybe are they profitable? Is that something I should consider?
Here's why I like mobile home parks:
They're recession resistant. I really like the way they have performed the last couple of recessions, and that is, very similar to multifamily and self-storage.
They're in demand. There's a continued demand for affordable housing, which is also why multifamily apartment buildings are so good. You can't build more affordable housing than a mobile home park, and there's such a shortfall of affordable homes in this country.
They're easy to manage. As a an owner of a mobile home park, I'm supplying the land, and I'm probably maintaining utilities like water, gas, and electric, but I'm not really providing the home. In most cases, I'm just providing the land and utilities. Therefore, the actual maintenance is much lower than for an apartment buildings.
Another thing I like is that there are additional profit centers, because especially if you have access to capital, you as an owner might be able to lease the homes to the renters. In other words, instead of requiring them to buy their own home, you buy it for them, and then become the bank. I love that because you can make additional money on leasing back the home as well.
Mobile homes are typically mom and pop owned, which means that if I can reach out to them and speak to the owner directly I can come up with terms, I can sometimes negotiate seller financing. And I like that, as well.
I like that mobile home parks in the right area can be what's called a covered land play, meaning that I can I can buy a mobile home park and operate as a mobile home park for say, 357 years, but the area's gentrifying, which means that down the road five to seven years, a mobile home park may not be the highest and best use, I might be able to sell it for a magnificent profit to a developer who might put a shopping center there or an office building or houses.
There are a couple of reasons why I don't like mobile home parks.
It's very difficult to outsource to management. Typically, successful mobile home park owners are self-managed. They have someone who lives there who becomes the property manager. The problem is, if your onsite manager moves out, you have to go through the process of interviewing people. It's difficult to put in a professional manager with mobile home parks.
Because so many of them are mom and pop owned, it's difficult to get into smaller, medium-sized mobile home parks from a broker. In multifamily, I need one or two good relationships with brokers, and they feed me deals all day long. With mobile home parks, it's not quite like that, which means that I have to execute marketing campaigns myself.
Again, the advantage is that I get access to off-market deals and seller financing. The disadvantage is I have to execute marketing campaigns myself, and I don't love doing that.. I just like like to focus on two or three great brokers and they feed me deals versus having to send out letters and, and postcards.
The third thing I don't love is I just don't like the way they make me feel. I kind of felt that way. When I did my first deal, it was in a slightly dingy area of Washington, DC. It was certainly an up-and-coming area, but I just did not feel comfortable there, especially at night. It's the same thing when I walked through a mobile home park – I just don't feel comfortable there.
So it's up to you, really, on how you feel about mobile home parks. They're just not for me.
So, mobile home parks are strong investments. They're high cash flowing investments. They perform very well during recessions. They're increasing in demand of because of affordable housing, and they're also easy to manage because they're simple.
But you do have to self-manage them, you have to execute your own marketing campaigns, and personally, I don't like the way they make me feel.
There you have it, the pros and cons of investing in mobile home parks. It's not for everyone. Is it for you?
Mobile home parks vs Multifamily properties
The best investment in the planet is still apartment building investing. It checks off all the boxes that we talked about, plus I can put a professional manager in place.
I want you to get started with it with investing, and there are great ways to do that. You can check out my my book here. It's on Amazon. It's called Financial Freedom With Real Estate Investing.
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