Investing in a single-family home or apartment building is cost-intensive because you’re buying the structure and the land. With a mobile home park, you’re only purchasing the land and common areas (streets, clubhouse, etc.). This means the operating cost will be roughly 30% compared to 50% with apartment buildings according to Park Street Partners. Also, per square foot, a mobile home park costs much less to acquire.When a tenant moves out of an apartment or home, you have to move fast to fill the vacancy. Depending on the complex, turnover can be high. Turnover also leads to cost. An apartment must be cleaned and repaired. Additionally, you’ll have to pay to acquire a new tenant.Mobile home tenants don’t move often. In fact, it’s costly for them to do so. “It can cost a tenant $5,000 [to] $7,000 to move their home out of a park and thus 98% of mobile homes will remain in the same location after the second year. 75% of owners expect to stay in their [mobile homes] for [five] years or longer, and a large percentage expect to never sell,” said Andrew Lanoie, Founder and CEO of Four Peaks Capital Partners, in a Forbes interview .In contrast, apartment turnover can be as high as 60%.
As the owner of a mobile home park, you don’t have to deal with contractors on a daily basis or at least as much as you do with an apartment building. Tenants maintain their homes rather than calling you. You may still need contractors for help with putting in or moving out a trailer and repairing common areas but overall wear and tear is far less than that of an apartment building.Costs are referred to as . In the graph below, manufactured housing comes in at the lowest point compared to other types of real estate investing.
There may be cases where a mobile home park owner rents out some of the mobile homes. Keep in mind that this strategy will increase cost as most mobile homes are not as durable as a permanent home or apartment.
Financing the purchase of a mobile home park isn’t far removed from traditional real estate financing. Some investors will line up other investors to help with raising capital. There’s no reason this same tactic can’t work for a mobile home park.If you are getting a loan, some of the differences, some as noted by CREFCOA, include:Some lenders may want detailed expense reports dating back three years. This may be difficult to come by as most mobile home park owners are mom-and-pop shops. Meaning, they’re a single owner and probably don’t have sophisticated records.As mentioned earlier, the mobile home park investment industry, for the most part, hasn’t been infiltrated by more sophisticated real estate investors. Gathering detailed expenses may take a lot of your time and require the cooperation of the current owner. However, a willing seller should be more helpful than not.
As with any real estate investing, homework is essential. Rushing into any deal because of time pressure can lead to disaster. It may be okay for an experienced real estate investor to rush into a deal. They know what they are getting into. But for a beginner, taking your time to gather information, speak with owners, and do proper due diligence will go a long way to making your first investment a success.Beyond your local market, there are some awesome real estate platforms that sometimes have mobile home parks for sale.Our favorite for buying individual parks (when they are available) is . RealtyMogul allows you to be a limited partner in a property – which is a great way to get started. They don’t always have mobile home parks on their platform, but if you sign up you can see what they offer. Check out RealtyMogul here.Another option for real estate investing is . Roofstock doesn’t do mobile home parks, but does allow you to invest in already occupied and leased properties. We like Roofstock because it’s basically turnkey to get into a cash flowing property on day one. Check out Roofstock here.