Buying a mobile home park may not be the first thought that comes to mind when considering a real estate investment. A single family home as an investment is a simpler, more familiar idea, and buying an apartment complex has a certain prestige that makes it appealing. But over the last few years, mobile home parks have increasingly become an attractive investment opportunity to the savvy real estate investor.
In the years following the real estate collapse of 2008, nearly any type of real estate investment was lucrative. The Fed had slashed interest rates to stimulate growth, and property values had plummeted. Foreclosures and short sales were common, making for incredibly attractive investment opportunities for those with capital. But as the market has recovered and is now booming in many areas, it's become increasingly hard to find promising investment prospects in either single family homes or apartment complexes. Homeowners are rushing to buy new homes before interest rates increase, and large financial institutions are buying up apartment complexes at prices that are out of reach for most individual investors. Mobile home parks have emerged as one of the few remaining real estate investments that are accessible for private investors, while having the potential to be very lucrative.
1. High Demand
The demand for mobile homes, particularly those in well run, well managed parks is high and on the rise. While the overall economy has recovered hugely since 2008 and home values have recovered along with it, wages have stagnated and in many areas have failed to keep up with rising real estate markets. And as more and more baby boomers retire, they are seeking homes that are affordable on their fixed social security and retirement incomes. Compounding this rise in demand is the fact that new mobile home parks are rarely being built due to zoning changes and lack of available land. As these factors drive increased demand for mobile homes, they will drive the value of mobile home parks up. And it appears that this increasing value will continue for quite a while, giving smart investors an opportunity for major returns.
2. Low Per Unit Cost
Single family homes, multifamily properties, and apartment complexes all have high per unit costs. This makes the bar for entry quite high on multifamily and apartment complexes, and requires a substantial investment in a single unit when buying single family homes. Compared to any of these options, the cost per unit in a mobile home park investment is remarkably low because you are buying the land rather than the homes themselves. This allows an investor to own a large number of units for a relatively low price.
3. Maintenance and Repairs
If you own single family, multifamily, or apartment properties, you are responsible for all repairs and maintenance of the homes. If an appliance breaks, it's your responsibility to fix or replace it. If something goes wrong with the plumbing, electrical, or roof, you need to hire a contractor and arrange for repairs. The costs and headaches associated with maintaining homes can stretch your budget and bring a lot of stress to your daily life. Owning a mobile home park is different because you are only responsible for maintenance, management, and upkeep of the park. The homeowners are responsible for maintenance and repairs of their own homes. If you are looking to make a substantial investment with relatively low ongoing costs and stress, buying a mobile home park can be a very appealing option.