When you think about investing in real estate, the chances are that single-family homes or apartment buildings are the first things that come to mind. However, both of these come with dealing with contractors and tenants daily. Purchasing an apartment complex comes with a reasonably high cost. One option that often goes under the radar is buying a mobile home community.
Purchasing a mobile home community comes with a lot of benefits. The maintenance for the investment is low, the properties are typically affordable, and a mobile home community offers high returns. If you are thinking about purchasing a manufactured home community, here are a few things that you should consider.
Manufactured home communities are often local investments. Most of the time, investors will know the area where they plan to purchase a mobile home park. It can be a bit difficult to find data on these types of communities. It is essential to understand the indicators of a potential property for sale. Motivated sellers are often found at mobile parks that are not operating optimally or are a bit run down. This means that you might have to put in a bit of effort to get the park up and running efficiently. It is essential not to let this slow you down as these properties are often worth the investment.
Using Listing Platforms and an Agent
One of the easiest ways to invest in a mobile home park is to use a local realtor. There are realtors in almost every area that knows about properties that might not be listed yet or have listings that have expired. Additionally, you can do some of your research and speak to the current owners of mobile home parks yourself. Send out letters to the owners asking them to contact you if they are thinking about selling the property. You might also try speaking to bank managers in the area. Bankers might have information about people who have a mobile home park for sale or who might be thinking about retiring and selling their park. Establishing a relationship with a bank manager also might help you in the future if you need funding.
As with any investment property that you are considering, it is vital to think about the site of a manufactured home community. You will not only want to research where precisely the park is located but also investigate what is located nearby. It is also a good idea to consider the size of a mobile home park. When you are considering this type of investment, targeting properties located in opportunity zones is a great idea. These areas are typically a good investment as there is room for growth.
Best Practices for Mobile Home Park Investments
As with any investment, research and due diligence are very important. The current owners of the property might have rents that are lower than the current market rate. Interview the staff, get an idea of the local economy, and get to know the current owners of the property. It is a good idea to have a buying checklist to use along the way. This might include financials, physical property, and information about the local market.
A financial checklist should include at least three years of profits and losses, tax returns, utility bills, rent increases, and capital expenditures. Your physical list should consist of maintenance records, water well tests, maps of the park, sizes of the lots, contact information for all of the contractors, and disclosures about any infrastructure issues. A local market checklist should include a profile of the economy, zoning checks, any environmental issues in the local area, significant developments being planned for the surrounding area, and if there have been any compliance issues.
When it comes to property investments, a mobile home community has a lot to offer. When you purchase one of these types of communities, you are typically just buying the land. You will then rent spaces to tenants who will put their own mobile home on the property. This means that you are charging a rental fee for the land and not the actual home, which lowers the costs of maintenance and other expenses that come with owning any building or home. Additionally, the demand for this type of space is very high. The profit that can be made from owning a mobile home community is often excellent, which is why it is a good idea to consider this type of investment.