Why Invest in Mobile Home Parks? 6 Reasons That Matter

The commercial real estate community and plenty of others are waking up to the fact that mobile home parks might be one of the best investments available in real estate. A variety of appealing factors make mobile home parks a standout winner in the portfolios of many real estate investors, and we want to take a look at why this is the case. By the end, it will be obvious that mobile home parks are worthy of being included in any investment portfolio. 
The unique mobile home park characteristics, such as low operating costs and high demand for affordable housing, contribute significantly to their appeal. Additionally, with the ongoing shift towards a more mobile lifestyle, these properties are likely to experience sustained growth and profitability in the coming years. As investors seek stable income sources, mobile home parks present a viable solution in a fluctuating market.

Affordable Housing That Benefits Residents and Landlords Alike

A great investment is one that benefits multiple individuals, and that is precisely what you get with mobile home parks. Currently, more than 21 million Americans live in manufactured (mobile) homes either as owners or renters. They have been drawn in by the fact that these homes are within their budget and are available throughout most parts of the country. The affordability factor is a huge draw for most of those individuals, and it’s easy to understand why. Here are some facts about just how affordable mobile home living is:

• Reduced Costs Per Square Foot – It is possible to boil down the cost savings to a per square foot basis, and those cost savings are eye-popping. On average, the cost to live in a mobile home is between 35-47% less expensive than a traditional home. This makes them far more attainable for the average American than a traditional home is. 
• Mobile Home Ownership is High – Given the more reasonable prices of a mobile home as compared to a traditional home, it should come as no surprise that a higher proportion of mobile home residents own their home. An estimated 71% of mobile homes are owner occupied. They often don’t own the land that their mobile home is parked on, but they own the structure itself. 
• Mobile Home Lots are Affordable Too – The average price of a mobile home lot ranges from $200 to $800 in most locations throughout the country. Some exclusive locations can climb even higher than that, but for the most part, costs are relatively contained for mobile home owners. 

These are just a few of the reasons why residents are particularly drawn to the idea of living in a mobile home. As more and more individuals realize that this is a possibility, it is anticipated that there will continue to be more and more interest in this way of living. Therefore, investors are increasingly considering mobile home park investing as an excellent way to expand their portfolio.  Prospective homeowners often appreciate the diverse mobile home floor plan options available, allowing them to choose a layout that best suits their needs and lifestyle. This customization adds to the appeal, making mobile homes a viable and attractive solution for many. As interest grows, embracing community amenities and sustainable living practices can further enhance the allure of mobile home parks.

Upsides of Mobile Home Park Investing

Before spending money for any type of investment it is wise to review the reasons why it is a good choice. Fortunately, when it comes to mobile home park investing, there are a bunch of reasons to consider it.

Low Cost Per Unit Investment

The initial output of capital into any investment is a true test of the backbone of an investor. This is why investors are often looking for an investment that has a low cost per unit. They want to get as much value for their investing dollar as possible. 

Mobile home parks are great on this metric as they are the lowest cost per unit of virtually all real estate investments. An investor can acquire more units for their investment dollar than they might with similar investments (such as apartment units). Therefore, it simply makes sense that many investors prefer to put their money to work in mobile home parks where they know they can earn a significant return. 

A Diversified and Low-Risk Investment

A real estate investor who puts all of their investment funds into a single house or apartment is taking on a significant risk. They are gambling it all on the hope that an individual tenant will keep up with their bills and pay their rent on time. Sometimes that bet pays off, but when it doesn’t, it can be devastating to the investor. 

With mobile home parks, the level of risk is far lower. Given that an investor is putting their money to work in a multitude of units, they will have effectively spread their risk out among the various tenants who move into those spaces. In other words, rather than risking it all on one individual tenant, mobile home park investors will be investing in multiple tenants. Even if they run into an unfortunate non-payment situation with a tenant here or there, it is not the end of the world for their investment. They can absorb some hiccups with a small percentage of their tenants if necessary and remain highly profitable. 

Rampant Demand

One of the critical components that makes any investment worthwhile is that the asset being invested in is highly prized. When there is enough demand for any particular asset, then the value of that asset will increase. This is certainly true of mobile home parks. 

Demand and interest in mobile homes is already quite high, and there is a good chance that it will only continue to climb higher as more people learn about how affordable they are. However, not enough mobile home parks are being built largely due to government regulations. 

Therefore, the demand for mobile home parks has been pushed even higher than ever before as individuals look for a place where they can rent a space to park their mobile home. Investors on the other side of that transaction can capitalize on the high demand for these spaces and take advantage of the fact that there are so many people clamoring for these spots.  Additionally, mobile home parks often provide a more stable investment compared to traditional rental properties, as the demand for affordable housing continues to rise. The benefits of investing in mobile home parks include lower maintenance costs and steady cash flow, making them an attractive option for savvy investors. With increasing numbers of individuals seeking affordable living solutions, the potential for long-term profitability continues to grow.

Low Turnover

Investors in mobile home parks don’t have to worry quite as much about the turnover rates experienced by owners of apartment buildings and single-family homes. Several factors contribute to low turnover rates in mobile home parks, including: 

• High Homeownership – The fact that many residents already own their own homes and simply rent the land means that they are less likely to want to pick up stakes and move somewhere else. They have already planted in one particular area, and they simply don’t want to have to relocate somewhere else. 
• Community Bonds – It is fairly easy to develop close bonds with the people who live in your mobile home park. The homes are parked fairly close together, and neighbors often have a community experience while living in these locations. Thus, many residents choose to stay in one area longer than they might otherwise because they don’t want to lose touch with the people that they have come to know and grow with. 
• Predictable and Affordable Rent – The rent charged by investors to tenants for mobile home park spaces doesn’t typically increase as often or by as much as the rents charged by apartment owners and rental home owners. The predictability of the rent is a big deal for those who are interested in keeping their costs under control. Fortunately, that is possible when renting a mobile home park space. 
• The High Cost of Moving – Making a move to another area can seem like a great thing until you begin to take the steps to do so. It is both logistically and financially costly, and that is something that many people prefer to avoid. Instead, they can choose to simply stay in place and avoid those costs. 
• Long-Term Lease Stability – The predictability and stability of a long-term lease at a mobile home park space is a big deal. Knowing that one can stay put in a given area for a considerable amount of time without much changing is a big incentive for many residents to stay. 

Keeping turnover low is the goal of every real estate investor, and those who put their money into mobile home parks are often able to find that it comes fairly easily to them. 

These are some of the reasons why investing in a mobile home park makes sense. Now, let’s consider the steps necessary to make it happen.  First, it’s essential to conduct thorough research to identify viable locations and assess the local market demand. Once potential properties are pinpointed, creating a comprehensive business plan will help outline strategies for success. In addition, understanding the financial implications and potential tax benefits of mobile home parks as investments will enhance your decision-making process.

How to Locate a Mobile Home Park to Invest In

Clearly, there are a lot of valid reasons to consider investing in a mobile home park. Understanding that is important, but the next step is determining what needs to be done to locate a mobile home park to invest in. Luckily, there are some effective steps for making this a reality. 

Check Out Listing Platforms

There are platforms online where one can take a look at the available listings in a given area. Those who are looking to sell their mobile home parks will often list them on these platforms to try to find the right investor to take their property off of their hands. 

Most investors choose to start with wherever is local to themselves and then branch out from there. It is wise to think carefully about the geographic areas where investment dollars might go the farthest. 

Identify Properties of Interest

Narrowing the list of potential investment properties down is essential. There are so many of them out there, and it is best to key in on the properties that offer the most promise. Once those properties have been identified, then it is possible to put together a comprehensive plan to express interest to the current property owners in potentially purchasing those properties from them. 

Speak with Current Mobile Home Park Owners

Reach out to the individuals who currently own mobile home parks of interest and let them know about your potential interest in investing in their property. It is possible that those owners might be prepared to sell their mobile home parks or at least connect you with other individuals who are. 

Alternatively, it is also possible to potentially buy a limited stake in a mobile home park owned and operated by another. Just keep in mind that this approach would likely require you to release at least some of your control over the decision-making process involved with the mobile home park itself.  You should also carefully review the components of purchase agreements associated with the investment to ensure you understand your rights and obligations. Engaging with a legal advisor can help clarify any complexities and protect your interests. Ultimately, while this route can be a way to enter the market with less capital, it’s essential to weigh the benefits against the potential loss of direct control.

Make an Offer

Among the many things that an investor needs to do to put their money to work in a mobile home park is to make an offer. It is essential to take a moment to reach terms that are agreeable to both parties. Certainly no investor wants to overpay for anything they put their money into, but it is also vital to consider the fact that this is the kind of investment that is designed to pay off handsomely in the long run. Thus, it is best to consider the potential revenue that such an investment can bring in and weigh that against the cost of the investment today. 

A Stable Investment in Uncertain Times

If there is one thing that can be reasonably said about the economic times that we live in now it is that they are uncertain. Hunting for investments that are stable and provide a reliable stream of income are the way to go. Real estate in general, and mobile home parks in particular, are a great way to do exactly that. 

Although the process of operating a mobile home park takes some significant level of work and planning upfront, there is no question that it can provide some significant rewards as well. Considering the points made above about the reliability of mobile home park tenants and the fact that there is such demand for these spaces, there is little doubt that this is a worthwhile investment. 

You can take the first steps towards becoming a mobile home park owner by following the path that others have made. If you do, your investment portfolio can begin to flourish in ways that it wouldn’t have otherwise.