7 Impressive Benefits To Mobile Home Investing
Mobile Home Investing
Whenever I see a patient for the first time, I like to find out a little more about them before diving into the real reason they’re visiting our clinic.
One of the ways I do this is by asking them about their likes/interests/hobbies on one of our intake forms.
Recently, one of my patients piqued my interest as they stated that they were into mobile home investing.
Both him and his wife used to own several single family homes, but being from the South (Louisiana), he found that mobile home parks were actually an even more lucrative investment.
I remember meeting someone at a real estate conference several years ago that also was into mobile home investing so obviously this must be an up and becoming popular space.
Heck, I even found a podcast strictly dedicated to this as well: The Mobile Home Park Investing Podcast
Let’s take a deeper look into investing in mobile home parks….
Mobile Home Investing
Most passive real estate investors focus on investing in single family homes (SFH), self-storage or apartment complexes.
It seems that mobile home investing is fairly low-key and doesn’t get much attention.
Unlike those that invest in SFHs, people that choose mobile park investing don’t own the trailers themselves, they only own the land.
This was something that I didn’t realize which makes this type of investment even more attractive.
It’s the tenants that actually own the trailers and pay rent for the space to house them.
There has been more interest in this type of investing as the long term demographic trends favors a higher rate of renters plus a big need for affordable housing.
Mobile (Manufactured) Home Statistics
Here are a few stats regarding mobile homes according to Apartmentlist.com:
1) An estimated 5.6% of all Americans, or 17.7 million people, live in manufactured or mobile homes.
2) Metro areas in the South and Southwest have the highest share of households living in mobile homes.
3) Mobile homes are the largest source of unsubsidized affordable housing in the U.S., providing shelter for one in ten households living below the poverty line.
4) Average monthly gross housing cost for a mobile home is $564 vs $1,057 for a site-built home or apartment.
5) On average in the 100 largest metros, mobile home residents spend 40.5% less on housing costs than those living in non-mobile homes.
7 Reasons to Consider Investing In Mobile Home Parks
1) Lower acquisition costs
As mentioned above, when investing in a mobile home park, you’re only purchasing the land.
On the other hand, when investing in large multifamily properties or single family homes, the cost per unit is higher.
If you’re looking for an investment that allows you to acquire more units for less money, then these parks offer the lowest cost per unit of any real estate asset class with potentially higher risk adjusted returns.
For active investors, you can easily expect to pay $100,000 or more per home or apartment unit versus paying as little as $10,000 per lot in a mobile home park.
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2) Low turnover
One of the biggest headaches an apartment or SFH owner has is keeping their units filled. Every time a tenant moves out, the space has to be cleaned, (sometimes repaired), and marketed to fill.
The longer the unit sits vacant, the more money that’s lost.
Mobile home tenants don’t move too often because it’s rather costly for them to do so. They can expect to spend anywhere from $5,000 – $10,000+ to move their home out of the park.
It’s for this reason that:
- 98% of mobile homes stay in the same location in the second year
- 75% expect to stay put for five years or longer
3) Virtually maintenance free
One of the reasons I decided to invest in passive real estate vs being an active owner was the fact that I had NO desire to be a landlord.
Also, I didn’t want to have to deal with contractors constantly repairing property. With mobile home park investing, the involvement is very low.
The actual owner of the mobile home is responsible for maintenance, updates, and repairs to their residence and not the owner of the park.
While the mobile home park owner is still going to need to account for the upkeep of the park, it will most likely be significantly less than what they would pay for the upkeep of the homes.
4) High demand
As you might imagine, most people aren’t too keen on living near mobile home parks due to their sometimes poor reputation.
There’s not many new parks being developed due to government zoning changes. The increased need for affordable housing and limited supply of parks has caused the demand for mobile home parks to rise.
Also, baby boomers on fixed incomes are retiring in record numbers creating a greater demand for affordable housing that will only continue to grow.
Research shows that roughly 10,000 boomers retire each day with an average social security benefit of just $1,294 per month and many have less than $30,000 in their retirement accounts.
More and more lower income Americans and retirees are looking to mobile homes as their chance of still being a homeowner.
5) Low risk
As the number of tenants increase in a mobile home park, the amount of risk decreases as well.
The risk of loss decreases with more units.
When you have more tenants, the risk is spread out more.
For example, if you only have 4 mobile homes on your lot and a tenant leaves, you’re losing 25% of your income. Whereas if you have 50 mobile homes on your lot and one tenant leaves, you only lose 2% of your income.Join the Passive Investors Circle
6) Less competition
If you’re someone that’s looking to get into real estate investing and don’t want to have to compete with tons of new investors, homeowners or others investors then mobile home park investing could be right for you.
Most owners are run by mom and pop operators who are small time compared to some other type of investment opportunities.
Many of these owners are typically older nearing retirement which makes them interested in cashing out of their business.
Even though the demand is high, you can still currently find owners who are interested in selling.
7) Good returns
It’s not unreasonable for investors to expect 10% cash on cash returns.
Cap rates for this sector are typically higher than both apartments and self-storage.
If you’re interested in learning how to making $100,000 in cash flow from one park, check out this article from Mobile Home University.
Passive Mobile Home Park Investing
I’ve talked at length about apartment syndications as they are my “go to” investment option for creating passive income.
If you like the mobile home park sector, one of the best ways to passively invest is also through syndications too.
Here, as a passive investor, you can invest with experts that know this space well, acquire and manage these properties to improve performance.
I wonder if you could create a mobile home park but be very selective in who could rent, picking just people with a great rental history and credit, or whom are moving down from homes, and market it as inexpensive living for those looking to downsize. Seems like you could create a paradise for retirees.