Investing in Mobile Home Parks

There are a variety of benefits associated with investing in mobile home parks, which is why their increasing in popularity. Depending on your specific needs and timeline, this may be a great option to help you create wealth and generate additional income.

Low-Cost Investment

Mobile home real estate can be a great, comparatively low cost, way to start your journey into the world of buying and selling and also a way to supplement your current investment strategies. If you are investing in mobile home parks, then that means you are typically purchasing the land where the park sits. This means that, instead of paying a high price for each individual home, you would pay a lower amount to simply invest in the land where the home is built.

Opportunities

This is still a relatively untapped market when compared to more mainstream real estate options. In fact, it is still very fragmented in most areas across the country, which creates great opportunities for investors who are willing to put in the work. This also means that there is significantly less competition. With the right approach and strategy, investing in mobile home parks can be an extremely lucrative option.

Read the following articles on this topic from experienced investors who know this arena, and discover even more real estate investment strategies in my blog.

From the Corporate World to Mobile Home Parks

From the Corporate World to Mobile Home Parks

Who knew that working in the world of mobile home parks could be so lucrative? We recently spoke with Ryan Narus, who has grown his mobile home park investment business to over 500 mobile home pads. Ryan started out as a car salesman and then moved to the corporate banking world before making the leap to becoming an investor.

Read on to see what you can learn from Ryan about networking, going above and beyond, and betting big on yourself.

 

Success Looks Different Now Than It Did in the Past

Like many of us, Ryan was told to go to college, get a job in the corporate world, and then move up the ladder to success. But Ryan quickly realized that that strategy is no longer viable.

What worked for our parents doesn’t work today. If you want a job that offers financial freedom, you have to make it for yourself. There are ways to earn money and scale a business, but you have to take the initiative. You can’t depend on another company to get you where you want to be.

Even if you work your way up to the top, there’s only so far you can go if you don’t own the business. Your best chance of success is to start your own business.

 

Don’t Let “No” Stop You

Ryan heard the word “no” a lot when he was first starting out. He even had 40 banks reject his financing application. Where many may have given up, he kept going.

If you want to get into real estate investing, you have to go in knowing that it’s not going to take off the minute you start. There will be obstacles and pitfalls along the way. The reason so many people fail is that they gave up too soon.

You have to have a mindset that you won’t give up, no matter what. Once you make it beyond the others who quit too soon, you’ll be primed for success.

 

Find People You Can Help — and Who Can Help You

Everyone has something to offer. If you can find people whose talents complement your own, you can accomplish so much more together. Ryan’s business partner specializes in underwriting. He linked up with a broker who needed help. The broker then helped him by giving him early access to deals coming on the market.

 

Network, Network, Network

No matter what phase of the real estate investing process you’re in, it’s all about who you know. Ryan credits a lot of his success to networking with as many people as possible. His goal is to get people on the phone.

Ryan finds people anywhere he can. He’s willing to talk to just about anybody, not just his best prospects. He networks in person and through social media platforms like Facebook and LinkedIn.

He also suggests networking with people who are both slightly ahead of you in the game and slightly behind you. He often has people who are a little further along who’ll offer him a property off-market because they’re getting ready to take their business to the next level and don’t want to deal with the hassle of putting it up for sale.

He also likes to pay it forward. If he’s offered a property that doesn’t work for him, he’ll often recommend someone he’s networked with.

 

Choose an Avenue That Matches Your Skill Sets

There are many types of real estate you can choose to focus on. While each can be lucrative in its own way, it’s more about your approach. Dig deep and figure out what skills you have. Even if you think those skills may have nothing to do with investing. You’d be surprised how a skill can transfer from one area to another.

Ryan chose to work with mobile home parks because he had spent a few years working as a car salesman. It was an emotionally grueling job that required him to continually put himself in front of people who may not want to talk to him. He used these skills to make it in mobile home parks because he deals with many of the same types of situations.

 

Be the Person Who Takes a Different Approach

The investment market is hot right now. Everyone is looking to buy, and sellers have their pick of buyers. Ryan said that one of his secrets to success was always offering a little something different than what everyone else was offering.

While others are being formulaic in their approach with people who own trailer parks, he recommends tailoring the pitch to each individual. He and his business partner take the time to get to know them and will do whatever it takes to close the deal, even if it means going to the person’s house. Tenacity can be incredibly powerful.

 

Don’t Be Afraid to Bet Big on Yourself

Many get into the investment game but only go halfway. They keep their day job while doing investments on the side. While they may have a few minor successes, they often bemoan that they could have so much more success if they just had a little more time.

Ryan knows many people like this. His advice is to not be afraid to go all in. It’s difficult to build a full business if you aren’t willing to bet big on yourself. That often means quitting your day job and giving up some security for a while.

Going all-in can be terrifying, but according to Ryan, you should imagine how you’ll feel when you’re old. Will you be glad you stayed at your job where you were never able to build something for yourself, or will you wish you’d taken the leap and bet big on yourself?

Obviously, you shouldn’t walk out of your job today, especially if you have a family to support. But start making an exit plan. Put up money so that you can try your venture for at least a year. If things don’t work out, you can always find another job. If things do work out, you’ll never regret your decision.

 

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mobile home real estate investment

Why Mobile Home Parks Are The Best Real Estate Investment In The U.S. Right Now

A recent article in Time magazine proclaimed that mobile homes are the “home of the future”. It has suddenly become apparent that mobile home parks – often subjected to ridicule and negative stigma in the past – are one of the key solutions to the U.S. affordable housing crisis. But what most people still don’t realize is that mobile home parks are not only the solution to American housing woes, but also the best investment in real estate right now.

Highest yields

 

Mobile home parks typically sell for around 10% cap rates and 20%+ cash-on-cash returns. That’s the highest yields in all of real estate. One of the key reasons for this is that most buyers are afraid to buy a mobile home park due to the stigma the media has created, thanks to films such as 8-Mile and television shows like COPS. As a result, the competition is low and the prices are lower, as well. In addition, you are typically buying directly from the mom & pop builders of the parks in the first place – most of which were built between 1950 and 1980 – and they offer sometimes insanely low prices.

Seller Financing

Another attribute of buying mobile home parks from the original mom & pop owners is that they frequently include seller financing. This allows you to avoid the entire banking industry, including credit scores, presentations and committees. It also means a lower amount down and lower interest rates.

 

Supply capped

One of the unique features of mobile home parks as a real estate sector is that it is the only one that you can no longer build. The supply is basically permanently capped. This is because virtually no city in the U.S. will allow new construction of mobile home parks so, when you add in the parks that are torn down each year for new development, the actual number of mobile home parks is actually declining each year. Because of the law of supply & demand, this one feature makes mobile home park values continually increase.

 

Huge Demand

Over 50% of every job created in the U.S. since 2007 is $10 per hour or less. We are basically creating a nation of poor people. And this bottom third of the U.S. demographic has no ability to afford the median home price of nearly $200,000 and the average three-bedroom apartment rent of $1,200 per month. The only form of housing that provides an affordable quality of life is the classic mobile home park. This has created an environment of escalating rents and high levels of occupancy – and this shows no sign of ever declining.

 

Mobile Homes are not “Mobile”

Most people do not realize that mobile homes are only designed to be moved one time: from the factory to the mobile home park lot. 98% of them never move again. It costs around $5,000 to move a mobile home from point A to point B, and no resident has anywhere near that amount of money (a recent study found that 70% of American households do not have even $1,000 in total savings.) Since mobile homes are not mobile, occupancy is never at risk of reducing.

 

No Capital Repairs

Mobile home parks are all about renting land, not structures. As a result, the homes belong to the residents and are treated as personal property. This means that you don’t have to worry about fixing roofs or foundations, or saving up to re-carpet the building. All the mobile home park owner typically has to worry about as far as future capital repairs is the paving of roads.

 

Few Maintenance Issues

With the park owner not owning the homes, there are also few maintenance requirements that the owner has to endure. As long as the water and sewer are flowing, that’s basically the end of the owner’s obligations.

 

Low Management Requirements

The typical mobile home park owner only has to write ten checks per month. Other than depositing the rent checks, and writing those checks, there is not much to manage. Most mobile home parks are similar to subdivisions in that each resident owns their own home and are basically stakeholders in the business model.

 

Good Company

While mobile home parks may be a secret to most investors, they’re not to two of the biggest investors in the U.S. Warren Buffett is the largest owner of mobile home manufacturing and financing in the U.S., and Sam Zell is the largest owner of mobile home parks. Those are the two biggest names in American real estate and investing. They would not be involved if it was not a terrific sector.

 

Conclusion

Most Americans think of mobile home parks as low-class bastions of crazy hillbillies. Smart investors realize that this stigma is absurd and are drawn to the asset class due to its stability and high levels of demand. It’s basically a battle of stupid vs. smart. If you’re smart, you’ll learn more about this real estate sector.

 

 

Frank Rolfe

Author Bio

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com.  

 

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Joe Fairless