For decades, the term “mobile home park” was not welcome when it came to investing in real estate. Although mobile home parks and manufactured homes have served as a bridge between low-to-middle income buyers (or renters) and quality housing for decades, “trailer parks,” as they are often called, conjured up many images, most of them not pretty.
The stereotype of mobile home parks as a living symbol of rural poverty, plagued by drug use and broken down cars, existed as mobile home parks themselves. However, this stereotype did not accurately reflect the reality of manufactured homes. Many manufactured home communities across the country are well-maintained, attractive places to live where pride of ownership is easy to see.
This is a big part of why the perception of mobile home parks among investors is starting to change. As apartment rents, home prices and mortgage rates continue to spiral out of control, mobile home parks have become popular targets for investors big and small. The recent surge in popularity of mobile home parks with investors is due to many factors.
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Why mobile home parks are an attractive investment
Almost all of these factors boil down to an investor-friendly economy. Mobile home parks have lagged behind traditional multi-family developments in value, which means investors are getting what they pay for. It costs much less money to buy mobile home parks than to buy a traditional multi-family housing community with a comparable number of units.
The cost of moving mobile homes from one park to another means that mobile home park residents are much more likely to stay put, even after new owners increase the cost of renting space at the park. inside the park. When outrageously priced tenants move out, their space is usually quickly replaced by a newer, nicer landlord who is willing and able to pay higher rent. So, in addition to affordability, you may have a more stable tenant base in mobile home parks than in apartment communities.
As buyers of single-family homes and traditional multi-family homes find themselves increasingly shut out of today’s housing market, more are turning to manufactured homes as one of the last bastions of affordable housing. This reality is creating a demand for living in mobile home parks among a middle-class demographic that just a generation ago might have refused to live in a manufactured home community.
For investors, the upward pressure from renters and buyers who are shut out of traditional housing markets combines with the relatively low acquisition cost of mobile home parks to create a brave new world. Although they can buy the parks for less than what it would cost to buy a similarly sized apartment complex, they have an almost integrated opportunity to increase both the property’s gross income and its market value. by increasing rents.
In many cases, with just a few upgrades and rent increases (which existing tenants are likely to pay or be easily replaced by new tenants who can), mobile home park investors can raise their capital. in months instead of years. .
To get similar rent increases from apartment buildings would require renovations that could cost thousands of dollars per unit, whereas with mobile home parks, tenants are responsible for upgrading and maintenance of their units. However, they are happy to pay higher space rental fees than anyone could have imagined a few years ago.
For all these reasons, mobile home parks and manufactured homes have become one of the best real estate investment opportunities. If you want to get in on the action but don’t have the capital to buy an entire mobile home park yourself, there are still options for you. A number of institutional funds across the country are raising capital to buy mobile home parks.
The best part is that they’ve done all the due diligence, which means you, as an investor, can invest your money and benefit from the passive income and appreciation value without the management headaches. daily. If you want to learn more about where you can invest in manufactured homes and mobile home parks, check out Benzinga’s favorite deals for current investment options.
Photo: Courtesy of RealtyMogul