Last Updated on November 3, 2021 by Kravelv
Over the years, mobile home parks have been gaining a lot of traction. Thanks to the minimalistic life choices.
You may know mobile home parks as large patches of land occupied by trailer homes and RVs.
But did you know that RV settlers do not own the piece of land where they park?
Instead, mobile home residents often have to pay rent to the landowner for using a plot as a parking spot. Subsequently generating a regular income stream for the landowner.
However, from the investor’s point of view, how much is it really worth investing in a mobile home park property? Of course, there is rental income, but is it a good return on investment?
Don’t worry.
If you’ve been asking the same questions, we’ve got the answers for you. Or, to say the least, we’ve got the way to find the answers for you.
Keep reading to learn more.
Ease of Investment
Before we move any further, let us demystify your clouds of doubt – mobile home park investments are not about mobile home units.
Yes, you read that right.
To invest in a mobile home park property, you don’t necessarily need to own units of mobile homes. Instead, you only need to own the land, which you can rent out to mobile homeowners.
Of course, you can increase your returns by investing in homes too, but that is not obligatory.
As a result, you can simply purchase a piece of land or several plots and rent them out as parking for mobile homes.
But, there’s a catch. You will still need to provide the renters with some facilities. For instance, you will need to offer them a septic plumbing and sewage system. Likewise, you’d also need to pay to maintain common areas such as roads and common play areas.
Apart from these, most of the other expenses are to be borne by the renters. Or better said, mobile home dwellers.
Regular Cash Flow
As mentioned already, the prime source of income for mobile park investors is rent from mobile homeowners.
Evaluating the income to expense ratio, there is usually a lot more coming in than what goes out.
Consider this – You own a mobile home park that can accommodate around 100 homes. Let’s assume that is 90% occupied throughout a year.
The rent coming in from lots on average may range up to $100, in contrast to the expense that may be around $25 per plot.
Now, using elementary mathematics, you can see that per plot, you can earn profits up to $75 per month. This totals up to $900 per year. Whereas the expenses amount to $300.
That’s 3 times less than the profit you’ll earn.
And in case you find your property not fetching you the returns you anticipate, you can always sell it out. Indeed, some brokers and companies may also buy it from you.
In short, your investment is always safe, no matter what.
Shrinking Market Size
Today, new mobile home parks are rarely being built. And the reason for it is not at all decrease in market demand.
According to some sources, most municipalities do not want any new mobile home parks to be built.
It means, buying a new piece of land to develop it into a mobile home park is probably not an option. As a result, the market is doubtful to become saturated.
Subsequently, there are also no risks of increasing competition. Which can further add to more security.
However, a contrasting report from many states is also emerging. Many investors in the race to gain quick profits have actually opted to sell out their properties.
The reason being, mobile homes usually have less durability. Meaning they fall apart very quickly. And are also very difficult to maintain. Today, investors seek mobile home park instant offer making brokers in exchange for quick money. This also means that there are minimal chances that you may increase your revenue from such an investment.
So, now the real question –
Are Mobile Home Parks Really Worth Investment?
Mobile home parks fill a considerable gap in the housing market. These are affordable for a large population. Plus, they assure regular cash flow for the investors, with low entry barriers.
But, since many parks are being shut down, it might be a dwindling situation for a new investor.
So, what you need to decide is if it is a suitable investment for you or not.
Clearly, there are other options for you to invest in, but reaping returns or gains on other investments is not so easy.
Besides, it might also give you the initial boost that you need to start off as a real estate investor.
You may know this for a fact, real estate is often regarded as the Billionaire factory. It has always been and will continue to be a playground for the rich.
So, it won’t be wrong to say that investment in mobile home parks isn’t all black and white.
The Takeaway
If you’re a beginner and have very little capital to invest in the real estate market, mobile parks are just not your thing.
They are costly despite promising cash flow for the investors.
On the other hand, if you’ve been in the market for some time and are looking for a stable income stream, mobile parks could be the right thing. Besides, it may also help diversify your investment portfolio.
There are several ways you can invest in mobile park real estate. You need not necessarily invest in the land. Instead, you can partner up with other investors and reap the benefits.
And if you’re up to it, you can also invest in mobile homes and rent them out. You might have to do with little returns in the beginning. But as you grow and move forward, the profits may soon shadow the cons.
In the end, mobile home parks are great investment opportunities. The only thing that you need to decide is its pros and cons for you. Don’t look for other market players, but focus on what you wish to achieve from your investment. And you’ll indeed have the answer.