When thinking of real estate investing, most people think of owning residential properties they can sell or rent out for a profit. However, there is one type of investing that isn’t as obvious. Therefore, it’s not as competitive, yet it’s still highly lucrative; and that’s investing in a mobile home park.
For the most part, mobile home park investors will own the park itself, not the individual units. This makes for easy maintenance as investors will not be responsible for repairs inside the units. Rather they will only be responsible for the up keep of the land itself.
Also, because these parks provide affordable living to tenants, the units are in demand and it’s not difficult for investors to profit.
If you are interested in investing in a mobile park home, there are some things you should know that will help you get prepared. Read on to find out some important information that will set you up for success.
Acquisition Costs
One of the nice things about owning a mobile park is that acquisition costs tend to be low.
With a mobile home park, you are paying for the land, not the structures. Therefore, you are paying much less per square foot than you would if you were buying an apartment building.
Operating costs are also lower coming in at 30% as compared to the 50% you would be paying to operate an apartment building.
Another benefit is mobile park owners don’t incur as many expenses during turnover. When tenants move out, they leave with their units. Therefore, investors are not responsible for renovations.
Furthermore, when mobile tenants move, they are faced with considerable expenses. This makes them less likely to leave making for less turnover in general.
Financing Options
Financing a mobile home park is pretty similar to financing any other property. You may want to go in with other investors to raise the capital you need.
Loans are also a viable option. However, there may be some lender requirements involved that are specific to mobile home parks. Here are some you may be dealing with:
- A fifteen pad (or lot) minimum per park
- A preference for paved roads over gravel on the property
- The majority of homes must be owned by tenants
- A preference for off-street parking
- Homes should conform to the HUD code
- Preference for communities with less than 10 homes per acre
- Preference for communities that offer amenities
Some lenders may also want to see a detailed expense report on the mobile home park. These may be difficult to come by if previous owners weren’t sophisticated investors.
Jumping in
If you think investing in a mobile home park is a good move for you to make, it’s best to start off slowly before making a commitment. Talk to other investors and do plenty of research so you know what to expect.
When shopping for a mobile home, there are plenty of real estate sites that have great listings. RealtyMogul is a good place to start because it allows you to be a limited partner in the property which is an ideal way to get your feet wet.
Investing in a mobile home park is a great way to generate income through real estate. Will you be taking the plunge?