Most people overlook mobile home parks as an investment vehicle due to negative perceptions about the kinds of people that might live there or what they represent (poor, dirty, untrustworthy, etc). What you think of when you visualize a mobile home park may make it unappealing, may turn you off and prevent you from benefiting from the park's potential as a great investment.

From an investor's standpoint, we have found that there are many reasons to LOVE mobile home parks. Here are 5 of them:

1. The cash on cash returns can be crazy. Because the industry has been a bit overlooked, there isn't the same demand for mobile home parks as there is for apartment buildings. As everyone knows, demand drives prices. Higher prices for the same rents means lower returns (or lower 'yield' or lower 'cap rate'). Our cash on cash returns for the parks we own average somewhere near 40%.
2. In the right areas, there is plenty of demand for affordable housing. We look at the current rental rates for single family homes and apartments in the areas surrounding our parks. If the single family home and apartment rents are pricing entry level workers out, mobile homes become more desirable. In our areas of investment, we like it when per bedroom rents exceed $250 to $300, then demand for units in our parks goes up!
3. Lower maintenance costs than apartments. In an apartment building, the landlord is responsible for the HVAC unit(s), roof, water heaters, toilets, exterior of the building, windows, common areas, landscaping, etc. A mobile home park that is full of owner occupied homes will only be responsible for common area maintenance (this could be road/parking lot, storm shelter and common area landscaping/maintenance). Our parks are set up so the home owners are responsible for their yard maintenance, leaving us to only worry about the common areas. We don't have furnaces, toilets, roofs, windows or building exteriors to worry about---that's up to the home owners! We just collect the lot rents and make sure the common areas are kept up! Super simple and we get NO midnight phone calls about clogged toilets or broken water heaters!
4. Lower taxes and insurance per unit. Owner occupied units transfers the tax and insurance liability to the owner of the mobile home. The park owner is responsible for the tax and insurance liability of the land only (i.e., the park), thus further lowering their fixed costs. If the park owner chooses to get into the mobile home rental business, then they would assume the tax and insurance liability for the home(s) as well. As you can guess, we prefer to sell our mobile home units to our residents!
5. Pride of ownership! This is a big one. It's hard to beat the intangible benefit here when a resident owns their mobile home unit. When the park rules and guidelines are clear and consistent, there is a huge benefit to the overall look and feel of the park because the unit owners want to keep their property values up and go above and beyond to make sure their house looks good and is cared for. Their care for their unit and the lot around their unit helps the overall park out.

There are lots of benefits of mobile home parks if you can see past the stigma of owning a mobile home park in the first place. Happy hunting!