Thanks to Nicolás Boullosa on Flickr for the Image
For those with an itch to combine their entrepreneurial skills with an interest in investing, real estate offers a fantastic opportunity to enjoy the best of both worlds. Unfortunately, getting started in residential or commercial real estate can require hundreds of thousands of dollars and years of experience. There is, however, a lesser-known method of real estate investing that requires less upfront capital and still yields fantastic rates of return: mobile home park investing.
What Is Mobile Home Park Investing?
When it comes to mobile home park investing, there are generally two types of ownership.
“One form of ownership involves the investor owning the lots underneath the individual homes, and the land surrounding the lots such as the streets, utility systems, club houses, swimming pools and other amenities,” RealtyMogul.com explains. “In this form of ownership, the tenant owns their home and pays only for the right to occupy the land where their home is located plus the use of the facilities.”
The second type of mobile home park investing involves the ownership of the land and the homes. In this setup, the tenant pays for both the use of the land and the home.
While there’s value in both investments, most investors prefer the first method to the second. It offers less risk, lower upfront cost, and more opportunity for a high return on investment (ROI).
Mobile home parks can make for fantastic investments with impressive capitalization rates regularly between 10 and 15 percent. But because of the reputation of mobile home parks, the majority of would-be investors overlook these investments. This is good news for you, or anyone else who is willing to take a second look.
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The Benefits of Mobile Home Park Investing
The question you’re probably asking is, “Why should I invest in a mobile home park?” And while nobody can answer that question for you, there are plenty of reasons. Let’s investigate a few of them:
1. Low Cost Per Unit
The cost per unit on mobile homes is extremely small. Whereas you might expect to pay upwards of $100,000 per apartment or single-family home, many mobile homes can be bought at $10,000 or less.
2. Minimal Upkeep
One of the worst parts about being an investor/landlord is responding to those late-night phone calls and maintenance requests. With mobile home parks, this is rarely a problem.
“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,” investor Robert Farrington writes. “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.”
3. High Demand in Any Market
The biggest risk factor with real estate is ending up with properties that you can’t lease. With no money coming in, you become unable to pay the mortgage and keep the property. With mobile home parks, this is rarely an issue.
“Mobile homes are essentially recession-proof. When the rest of the real estate market gets hit hard, mobile home demand suddenly surges,” Green Residential points out. “Cost-effective living is always in demand, which makes it great for balancing out your portfolio and income stream.”
How to Get Started
Virtually anybody can get started with mobile home park investing. You’ll need to begin by digging in and researching the ins and outs of these investments. Join online forums, watch interviews, read books, and meet up with other investors in person. Contrary to some other types of investments, this niche is much more about what you know.
Armed with knowledge, you’ll need to figure out your financial situation and save up enough money to make a down payment. You can then start your search for mobile home parks nearby. There are numerous websites that provide listings, but you may also benefit from working with a broker in the industry.
Be patient and wait for the right opportunity to present itself. Before too long, you’ll be enjoying the lucrative benefits of mobile home park investing.
