New duplexes or mobile home park??

3 Replies

Alright my fellow investors I'm in a deliema and need some advice please. I have been investing for about seven years now, I just finished my biggest project and I'm planning my next move. I have two options, build some new duplexes or invest in a mobile home park. I'm sure most of you know the pros and cons so I'm not going to go into all the details but this is what's on my mind.... I can invest in ten acres with five mobile homes with room for twenty more mobile homes, I would pay cash for the other twenty homes as I went along therefore significantly increasing my cashflow and it would be a very nice return on investment. Or I can spend about four times the money and build four more duplexes. The return wouldn't be near that of the mobile park and the cashflow wouldn't be either but the equity would be far greater. So my question is, should I invest in the mobile park and create a cash flow that would boost my business and help me to reach goals faster then continue to invest in equity properties or go a head and invest in equity properties now? Any advice will be appreciated. Thanks in advance!

It sounds to me like you've made your decision but are looking for confirmation of that decision.  The market must drive your final choice.  If you plan to hold the properties long term you will have much less maintenance and expenses with mobile homes as long as you plan to sell the homes and only retain ownership of the land.  Duplex value is based on comparible properties for the most part and can therefore be more volatile.  Mobile home parks are typically based on the income approach.  If you have 25 mobile homes that average $200 per pad with a 30% expense ratio your value should be somewhere around $420,000.  That is based on a lot of assumptions of course.  The duplexes will be worth whatever similar properties are selling for at the time.  If you sell off the trailers you will own a parking lot with tenants who have a very high cost of moving out.  The cost of moving out of a duplex is next to nothing.  The biggest question is what does the market want.  Next will be what the town will allow and what will the infrastructure cost.  You will want to have public utilities billed directly to the tenants if you can.  Some towns may mandate city water and sewer anyway.  I would caution against private water and sewer or master metered utilities with submeters.  This is but a fraction of the considerations but it should be a good start.

Mobile Homes will produce better cash flow. If you own the land you will benefit from the appreciation.
To me it depends more on your market and who your ideal tenant/customer is.

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