Investing in real estate takes time, a lot of money, and even more patience. However, there is one investment that allows you to quickly break into the market, often without any cash down. That investment is called a mobile home park investment.
Mobile home parks are great investments. They provide a stable income and can help you build wealth. There are certain characteristics of mobile home parks that separate them from other businesses, causing them to stand out among investment opportunities and making them an attractive investment to consider.
What is A Mobile Home Park?
A mobile home park (also known as a trailer park) is an area of land where mobile homes are placed. It's owned by one person or company who rents lots on which people can place their mobile homes. Just like you would rent an apartment or house, homeowners pay lot rent every month. There are many different types of parks: All-age and age-restricted parks are the most common.
Why Mobile Home Parks?
The biggest reason why I love this industry is because it's recession-proof! When houses crash down in value, people can't afford them and move into mobile homes to save money. During recessions, people move into mobile homes and during upswings people have more money to buy houses and move out from their mobile homes.
The Real Estate Investment Strategy
As the name suggests, a mobile home park is a piece of land with several mobile homes on it. For example, if you own a 100-space mobile home park and each space rents for $300/month, then your monthly revenue would be $30,000 (100 x $300).
While that sounds great, there's an important nuance that makes this investment significantly different than owning other types of rental properties and businesses. Mobile home parks are like apartment buildings except:
Mobile homes are owned by their residents. The tenants in an apartment building have no ownership in the building they live in, while tenants in a mobile home park own their own homes and rent the space where their home sits from you. This means that your residents are just like homeowners and have a financial incentive to keep their property value as high as possible. That's why mobile home parks are so easy to manage — your tenants act like owners!
Benefits of Mobile Home Parks
Mobile home parks are a very unique niche of real estate investment. Mobile homes are not the same as manufactured housing, which we discussed in more detail here. So what exactly makes mobile home park investing so unique?
Advantages of mobile home parks:
- Large inventory of homes that can be rented to tenants and provide cash flow.
- Most parks are on large parcels of real estate, minimizing the risk of other developments being built around you and limiting the supply of competing properties. As a result, you are typically dealing with a captive audience.
- High barrier to entry for competition due to the large amount of land required to build a park.
- In most cases, there is no need to manage the property yourself as you can outsource all management functions for a low monthly fee.
Conclusion
Investing in a Mobile Home Park can be an extremely profitable endeavor. There is a lot to it and quite a bit of money to be made and done.
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