Getting Started with Mobile Home Park Investing: Tips for Beginners
Mobile home park investing in the United States is one of the most common ways real estate investors get into the habit of investing in property with lower financial means. The professionals at Property Records of New York created a list of how to invest in mobile home parks for beginners:
Two Types of Mobile Home Park Investing in New York
Owning the land but not the mobile homes: There are two different types of investing in mobile home parks, the first one is buying the land that the mobile homes are in and renting them out for a monthly fee, the mobile homes are owned by the residents. As an owner of the land or lot, you are not in charge of repairing the mobile homes only the land, for example, the roads, potholes, utilities, and similar things.
Owning the land and the mobile homes: The second type of investment in mobile home parks is to own the lot and the mobile homes and rent out the mobile homes to tenants just like a traditional apartment building. Owning the lot and the mobile homes will bring you more money each month but it also has a lot more responsibilities by managing the homes that are in the lot.
The demand: There are currently 8.6 million mobile homes across the United States with an estimated 50,000 mobile home parks across the United States; the people who usually rent out mobile homes are low-income families with an average of $20,000 per year. The monthly rent for the average 1-to-2-bedroom mobile home is $1,000 in 2019. 8 percent of United States residents live in mobile parks.
Why Invest in Mobile Home Parks in New York?
Growing demand for affordable housing: In this economy, whether it’s going up or down there will always be a demand for affordable housing. The fastest-growing segment in the United States is affordable housing.
Stability and predictability: There is a misconception about mobile homes that people tend to move location all the time and they don’t. Even though it has “mobile” in the name most mobile homes are difficult to relocate. In the majority of the cases when mobile homes are delivered when their first purchased they stay in the same lot, that’s over 50% that alone shows the investor how stable and predictable a mobile home can be. Not only is it a hassle to move a mobile home it’s also very expensive, but the average cost of moving a mobile home is also $30,000.
Limited competition for new parking spaces: When developers go to city hall for a permit for a piece of land they rarely say they need a lot for a mobile home park, so there is limited competition for new lots. Be aware that some cities have an injunction on mobile home development because of its reputation.
Potential for higher returns: When buying the lot correctly you only have to worry about fewer repairs since residents bring in their own mobile homes. In an average apartment building, you own the land, the apartment building, the inside, the stoves, bathrooms, the roof, and everything in between and you have a responsibility to replace and take care of them, thereby increasing higher monthly returns.