If you’re looking for a new and exciting way to invest your money, mobile home parks may be just the thing for you. These parks have become increasingly popular investments in recent years, with prices sometimes reaching into the millions of dollars. In this article, we’ll discuss the basics of mobile home park investing so you can decide if it’s right for you.
How Mobile Home Park Real Estate Investing Works
The basic idea behind mobile home park real estate investing is simple: You purchase a piece of property, usually raw land, and then develop it into a community of mobile homes. Alternatively, you can buy a property that someone has already developed for use as a mobile home park—in many cases, there may be existing tenants and other revenue streams.
As the owner and operator of the park, your tenants will rent space from you to place their mobile homes. These tenants also pay you monthly lot fees, just as they would at any other RV park or campground.
How Do Mobile Home Parks Make Money?
Mobile home parks make money from the lot fees tenants pay to park their mobile homes. Owners that offer homes (in addition to spaces) also make money from rent. In addition, the parks may generate income from selling water, sewer, and electric services to their tenants. Finally, park owners can make money by renting out space for storage sheds or garages, charging for laundry, or operating vending machines on-site.
Are Mobile Home Parks a Good Investment?
Mobile home parks can be a good investment if you find the right property and are willing to do the work necessary to develop and manage it. However, there are a few things to keep in mind before investing in a mobile home park:
- Property location. Look for a property that is close to transportation and other amenities. Ideal mobile home park investments should also be in an area that is growing or has growth potential.
- Property size. Choose a property that is large enough to accommodate the number of mobile homes you plan to have in your park. The land should also be large enough to accommodate common areas, roads, and utilities while complying with setback requirements imposed by the applicable zoning code.
- Zoning regulations. Not all vacant property can be developed into a mobile home park. Even lots zoned for this type of commercial development may be subject to limitations on how many mobile homes can be placed on the property or how close together they can be.
- Cost. Make sure you have the financial resources to purchase and develop the property. Mobile home parks can be expensive to purchase or develop, so you must have access to capital.
- Ongoing time commitments. Be prepared to put in the time and effort necessary to develop the property and manage the mobile home park on an ongoing basis. Mobile home parks are not a “passive” investment; you will need to hire a management company or be involved in the park’s day-to-day operations.
How To Invest in Mobile Home Parks
If you want to invest in a mobile home park, there are certain steps that you should follow. Because of the costs involved in acquiring or developing a park, investors should only take on this type of project after proper preparation.
Here are a few steps to follow if you want to invest in a mobile home park:
1. Develop a Detailed Plan
If you want to invest in mobile home parks, build a plan before spending time looking at properties or writing offers. Write a detailed business plan that describes the proposed development, projected financials, and who you’ll rely on to handle different parts of the project.
Whether you plan to build a park or buy one, determine who will be responsible for each phase of construction or renovation, maintaining the property, and managing the park. Also identify who will handle legal, accounting, and administrative issues.
As a part of this plan, you’ll also need to develop detailed financial projections that detail how much money you plan to make and spend each year. Your pro forma financials should go at least five years into the future and will be necessary to obtain any form of financing for your project.
If you’re developing a new park, also create a plan for marketing the property to prospective tenants once you purchase the land. Decide who your target market is and what type of mobile home park they are looking for.
2. Choose a Property
Whether you want to buy a mobile home park or build one, you’ll need to find a property that’s right for you. As with any other real estate investment, location is critical to a successful community. You need to purchase land in an area that is:
- Zoned correctly for your needs
- Appealing to your target market, and
- Situated near the amenities and conveniences that your tenants will demand.
To find the perfect piece of land for your mobile home park, you can work with a real estate agent who specializes in this type of investment property or check local listings for commercial or vacant property.
3. Develop or Improve the Park
Once you find and acquire a property that suits your needs, start developing your park or making improvements. If you’re creating a new park, you’ll likely need to go through a zoning and permitting process with your local government that may require the help of an attorney.
If you’re buying an existing mobile home park, work with a contractor to improve the property, create more spots, build a laundromat for tenants, or improve common areas. Improvements like this can help you justify higher rents and make more money from each space or rented mobile home.
4. Operate Your Mobile Home Community
Once you own your park and it’s ready to operate, market the property to ensure the park stays full with paying tenants. As the owner, you’ll also need to manage the property to make sure tenants have active leases and pay their rent. Alternatively, consider hiring a manager that can handle day-to-day operations on your behalf.
Other aspects of mobile home park management may include mowing common areas, repairing broken sidewalks, or plowing snow in the winter. Mobile home park owners and managers must also handle complaints or issues.
Mobile Home Park Investing Pros and Cons
|Infrequent tenant turnover||Management is time-consuming|
|Tenants typically pay on time||Maintenance can be expensive|
|Opportunity for considerable appreciation||Properties have become expensive to acquire or develop|
|Multiple sources of potential revenue||Lots of zoning concerns|
Frequently Asked Questions
Do mobile home parks appreciate in value?
Whether mobile home parks appreciate depends on the location and condition of the park. Mobile home parks, like other types of real estate, tend to appreciate over time. This is because they are a relatively stable form of real estate investment. As demand for them continues to grow, their value will continue to increase.
Do trailer parks make money?
Trailer parks can be a profitable investment, but there are a few things you need to keep in mind. First of all, you will need to have access to capital in order to purchase the land and develop the park. You will also need to be prepared to put in the time and effort necessary to manage the park on an ongoing basis.
Mobile home parks are not a “passive” investment, and you will need to be involved in the day-to-day operations of the community. However, if you are willing to invest the time and money necessary, trailer parks can be a very lucrative investment.
What is the difference between a trailer park and a mobile home park?
Trailer parks and mobile home parks are developments intended to house mobile homes or trailers, each of which can be moved between spaces. The terms trailer park and mobile home park are often used interchangeably, as each is composed of numerous spots for parking manufactured movable homes. These communities also feature common areas and other amenities.
What are the most popular financing options for mobile home parks?
The most popular financing options for mobile home parks include banks, mortgage brokers, and government-sponsored programs like Fannie Mae and Freddie Mac. Additionally, mobile home parks are often financed through private lenders or with equity from other investors.