Multi-family vs. Mobile Home Park Investing over a 5 Year horizon

5 Replies

Hi everyone! 

For the last year, my goal was to buy a multi-family property. I selected a few markets, and has 3 deals under contract - but for 1 reason or another, things didn't work out as planned. Given that multi-family investing is aggressively competitive right now, I'm re-considering my strategy - potentially investing in mobile home parks or even SFRs instead. My goal is to make as much money as I can over the next 5 years - investing about 500K/year. So my questions are the following: 

1) Is mobile home investing as competitive as Multi-family investing right now? 

2) Over a 5 year horizon, all else being equal (market, time spent etc), what is likely to provide a higher return on investment, if you combine both cash flow and appreciation? My understanding is the cash flow is slightly higher in mobile home investing, but appreciation in MF? 

Thanks All for your opinions and advice. 

@Kusum Chanrai I have a one property within a mobile home park and also two duplexes (along with two other SFRs). You are right that the cash flow is much better for the mobile home park vs the duplexes or SFRs. As far as appreciation goes I cannot really gauge that as I have not looked into refi or selling my mobile home unit. But the SFRs do appreciate better than the MFs, however I am switching to more MFs rather than SFRs because I am looking to build cash flow over appreciation and the overall cost per unit for MFs is better than SFR.

Hope this helps,

Joe

@Kusum Chanrai are you looking to invest in mobile homes or the entire park? Because there is a major difference. Based on your goal I'm going to assume you mean the entire mobile home park you want to buy. Every asset class right now is very competitive for deals that are on market. Mobile home park investing is an entirely different animal than SFR and apartments. First I would get educated on the park investing as much as possible. Listen to podcast, all the traditional stuff on getting educated. Kevin bupp and frank Rolfe have great info. Bigger pockets Ia a great place as well.

Traditionally mobile home parks have cap rates have been around 9-11%. With cash on cash returns around 20% is the standard. So they have better returns than apartments and single family's. Keep in mind that there are only around 40k parks in the United States. While there is well over 500k apartments. So there is a lot less product available.  It does make it a little harder at times. But it makes it attractive because they are not building anymore parks.

If you need help just ask. Ryan  

SFHs are a appreciation play since cash flow is usually low and expenses/vacancy makes them high risk. Multi family appreciation is primarily driven by rental income so not a appreciation play but rather a income stream.

MHPs are a entirely different animal and not a easy step first go round. Great cash flow if purchased and operated right. Appreciation 100% based on NOI.

For a 5 year time frame I would not gamble on or rely on SFH appreciation. Huge gamble for that time frame. If it happens great as always with investing but those targeting cash flow will likely be the safest and biggest winners over all except in very select regions..

As another investor in CA, I am in the same boat...... SFR with numbers that make sense in CA are very hard to find.... MFR is very competitive and take more $$ to get in to....so I had been considering mobile homes..... interested in learning more, as I only have experience in SFR's...

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