The Benefits of Owning a Mobile Home Park
When you drive through a mobile home park, what’s the first thing that comes to mind? Is it the popular movie “8-Mile” starring Eminem? Or maybe he just recoils in horror, imagining what life would be like if you had to live there. Well, when I walk by a park, I think about financial security. That’s because I have one.
The benefits of owning a mobile home park are many, and much more than you can imagine. Here are some of the top reasons why you should want a park:
Cash flow
Mobile home parks generate a ton of cash flow. The math is simple. If you have a 100 space mobile home park, and the lot rent is $250 per month, then you have $300,000 per year in cash coming through the door. With an expense ratio of 30-40% of gross, annual net income is approximately $200,000 per year. That’s a lot of money coming from a single property.
In the world of commercial real estate, mobile home parks are the king of cash flow.
Appreciation
Mobile home parks pay you twice: once with the monthly cash flow and the second time with the appreciation of the assets when you sell them. How much appreciation of assets in value? the popular book The millionaire next door lists in his chart the most common traits of “mobile home park owner” millionaires. In fact, the stories are endless of owners who bought parks for around $300,000 that are now valued at $1,300,000. Why are they appreciated so quickly and significantly? It’s the power of volume again. If you raise the rent on that 100-space mobile home park by $50 per month for a couple of years, then you will have created $50 x 100 x 12 = $60,000 per year in additional revenue. And at a 10% cap rate, that increased the property’s value by $600,000 with just that one share.
Stability
It costs $3,000 to move a mobile home. Tenants can’t afford it. As a result, the mobile homes never move. Since they don’t move, your renter base and income remain constant. When a client can’t pay the rent, he usually leaves the house, at which point he can finally take possession of it through abandoned property rights.
The same is true on the expense side. Nothing ever happens in a mobile home park. There are very few items in the budget, and they are basically the same every month. These expenses include insurance, property tax, water, sewer, electricity, and mowing.
Freedom
Mobile home parks do not require a lot of management attention. Basically, you are renting land and you don’t have to spend a lot of time keeping an eye on what your tenants do with it. The tenant is responsible for maintaining their lot and mowing the lawn, so the park owner really only has to worry about the driveway and common areas, like a playground.
What does this mean? It means that you have a lot of free time on your hands. You can choose your own schedule and take a trip if you want. There are no restrictions. That’s not to say you can just buy a park, forget about it, and the cash goes into your checking account every month, far from it. But with some smart systems, and the right park purchase, owning a mobile home park doesn’t take a lot of time. Because of this, it’s also a great addition to your day job, as you can operate the park at night and on weekends.
helping people
Mobile home parks are all about “affordable housing”; essentially low-income housing. About 60,000,000 Americans live with a household income of less than $20,000, or 20% of the total US population. These people have no hope of independent housing other than a mobile home park. A mobile home can give you privacy, a garden, a sense of neighborhood. You are truly helping people when you provide a quality mobile home park environment. Do you think you are doing it right when you recycle your newspapers? Try to change people’s lives.
The ability to do good while earning money is a true win-win, and is rarely found today.
Don’t let the media ruin your opportunities.
For years, the media has portrayed mobile home park residents as a bunch of worthless rednecks. Jeff Foxworthy has made a living fostering such misconceptions. The truth is, people who live in mobile home parks are no different than you and me, they just don’t have as much disposable income. Their children go to school and college, read about world events, and go to the movies. They are not scary. That’s a stereotype the media has embraced because it works for you to watch TV and read newspaper articles.
Don’t let this unfair image ruin your financial performance.
Conclusion
Mobile home parks mean money. Big money. But they also offer other benefits that money can’t buy. Explore your options regarding the affordable housing industry. You may find that it is your best option for financial security and peace of mind. it has been for me