We have experience investing in multifamily apartments & mobile home parks, below are 7 reasons we believe mobile home parks are the best asset class to invest in:
Lower expenses
The average expenses for stabilized mobile home parks is 30%, versus 50% for apartments. The lower expenses leads to higher returns for investors.
Higher Tenant Retention
A resident who owns their mobile home stays an average of 13 years, versus the apartment average of 1-2 years. This lower turn-over rate vastly cuts the largest expense that apartments have.
Higher cap rates
Cap rates are a way of valuing commercial real estate (the higher the cap rate, the better returns the investment). For mobile home parks, cap rates are typically 1-2 points higher than apartments. Often, this is the difference between an 8% return and a 20% return.
No New Competition
Mobile home parks are effectively illegal to build in most cities across America. Existing parks are "grandfathered in" so cities cannot shut them down. This cannot be said of any other form of real estate, there are always apartments or self storage being built. No new competition means you have a competitive advantage for your product (afforable housing) & means you don't have to worry about new developments taking your customers.
Lowest Default Rate
Mobile home parks have the lowest default rate of any form of commercial real estate. Banks familiar with the asset class consider them a superbly safe investment, and many offer terms more favorable on mobile home parks than they do on other forms of real estate.
Better Financing Options
In addition to better banking terms, seller financing itself is more prevalent with mobile home parks. This is due to most parks being owned by the original "mom & pop" builders, many of which have no debt on the property, making sellr financing easier to obtain. Seller financing has benefits such as lower down payments & non-recourse.
Easier To Manage
Since you are just renting land, there is no ongoing repair & maintenance like you find with apartments. This, coupled with the lower turn over rates as mentioned above means parks can be managed cheaper & more effectively than apartments.
To learn more about mobile home park investing, visit our Podcast, or reach out to us at our Contact Us page.