A few years ago, if you were looking to invest in mobile home parks, you might have been labeled as crazy. However, times have changed now and so has the opinion of many people. After the last real estate crash, investments in this sector had been lucrative and there was good money to be made. Though, with time, the sector has reemerged and now there is tough competition among single-family homeowners who want to purchase a house before interest rates jump up. The market has, in fact, seen a boom and prices for large apartment complexes do not make sense to small time real estate investors. Only large investors and businesses are venturing into them, it seems.
Mobile Home Parks
In such a scenario, investors can either sit in and wait for a crash or be creative and invest in mobile home parks, which have become quite popular recently. The distinguishing feature of these parks is that the residents own or rent the home while you acquire and lease the land to them. Though it might be hard to acquire the land in the first place, once you are in the game, there is a handsome amount of money that can be made. Here are some of the benefits associated with investing in real estate mobile home parks.
Low Cost per Unit
When you invest in a single family home or large multifamily complex, the cost per unit is on the higher side. However, mobile home parks allow you to spend less and acquire more units. In fact, it has been reported that mobile homes have the highest rate of return and risk ratio compared to any other class of real estate investment. Because you only have to acquire the land and not the unit itself, the cost is significantly lower which enables you to own a lot more units than you would have otherwise.
Low Maintenance Costs
Working with contractors is one of the most grueling aspects of owning a property. With mobile home parks, you don’t have to worry about repairs and maintenance as it is the job of tenants to do it themselves. There will be some expenses related to the upkeep of the park as a whole but they are significantly less than what you would have paid otherwise.
Spreading the Real Estate Risk
Since mobile home parks allow you to own more units, the risk is spread out and you acquire more units for your investment dollars. You don’t have to worry about someone evicting the property suddenly and leaving you with heavy losses because you have other similar investments that continue paying you dividends. Investing in mobile home parks is a great way to secure your overall investment as the risk is spread out across your portfolio.
While prices of real estate are rising a great deal, income levels are not rising to the same extent. Therefore, the demand for well-maintained mobile home parks is ever so increasing. Baby boomers who have been living on a fixed income are retiring which is leading to the high demand for affordable housing. Because owning a mobile home costs less than owning any other form of property, many low-income people are inclined to invest in it. That is great news for you as a mobile home parks investor.
Low Turnover Rate
Out of all of the expenses in a real estate investment, the tenant turnover rate is one of the most costly. Repairing and cleaning costs can be significantly higher and you are also stuck looking for new tenants which requires marketing costs and use of other resources. Moreover, you are also losing money because the property is empty and you are not receiving payments.
When tenants own their mobile homes and they are only leasing land, the turnover rate drops significantly. Moving their home out of a mobile home park will cost them quite a bit, so most of them choose to stay for long periods of time. The risk of losing tenants regularly is also minimized which is another powerful benefit of such an investment.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.