Get the Dirt on Investing in Mobile Home Parks

 It may be a great time to invest in Mobile Home Parks.  Why?  As interest rates continue to rise, many experts expect the need for affordable housing to increase.  Have you considered adding one to your investment portfolio?  Many investors, when considering an investment in multi-family, will typically think only of apartments.  Mobile Home Parks have come along way from the stereotypical "trailer parks".  In fact, the standards of factory built housing units have evolved from a "mobile home," which is a unit built prior to June 15, 1976 before the Housing and Urban Development (HUD) code came into effect, to the "manufactured home" of today.

From an investment point of view, owning a Mobile Home Park or Manufactured Home Community may be more appealing than owning an Apartment Project for a number of reasons:

Manage the Land. This is one of the most appealing aspects to investors.  Basically, Mobile Home Parks and Manufactured Home Communities provide land leasing in the housing market providing for ease of ownership for the resident.  As a result, for the landlord there are no walls to paint, stoves and bathrooms to clean and so on.

It should be noted that a number of parks do include park owned "rental units."  This works for some; however, most would agree that the ultimate goal is to manage the "dirt."  In fact, a high number of rental units may increase the transient nature of a park which is an ongoing concern with apartment ownership.

Pride of Ownership. Definitely, a major plus for an investor versus owning an apartment project.  Residents that own their own home will tend to take better care of their personal investment and its surroundings.  In fact, many residents take pride in "their community" and may assist in "overseeing" the park as they also have a vested interest in maintaining "your investment."  Comparatively, some apartment owners continue to struggle with the issues associated with tenants who could care less about a unit that they do not own.

Management.  If the investor does not want to self-manage, for the smaller parks they can often engage an on-site park manager compensated by free lot rent and/or a salary for handling the day-to-day duties.  For larger parks, multi-family fee management firms are the recommended choice as they have the systems, resources, expertise and back-up to provide the owners piece of mind that their investment is being properly protected.  The former will tend to involve more owner oversight than the latter.

Zoning.  Quite frankly, there are some local municipalities that just do not like Mobile Home Parks or Manufactured Home Communities.  They may not promote the establishment of new parks or expanding existing ones by enforcing strict zoning ordinances.  From an investor's point of view, there may be an advantage to local governments having tough zoning ordinances.  Basically, in many municipalities where there is opposition to new parks, the competition is typically limited to the parks that are already established versus new parks coming on line in the future.

Stability.  Due to the cost of transporting and setting up a home, the residents remain in the community for a longer period of time versus an apartment's average tenancy.  If the resident desires to relocate, typically, the home will be sold to another individual providing an uninterrupted income stream to the park owner.

Affordability.  From the tenant's perspective, due to the rising cost of living, this housing type provides an opportunity for home ownership.  This type of affordable housing is attractive to those on a limited budget ranging from the first time home buyers to the senior citizens investing in a "summer home."

This can be achieved by conventional financing or the park owner could provide financing utilizing a "rent to own" program.  By acting as the "Bank", the park owners use this program to provide a reasonable payment plan to a prospective resident in which to purchase their home.  This is a win-win scenario for the owner as this increases occupancy while providing a reasonable return on the initial investment of the home.

Return On Investment.  From the perspective of the investor/owner, the entry cost to invest will appear palatable as per lot prices are dramatically lower than per unit apartment costs, yet the returns are generally higher.

Mobile Home Parks and Manufactured Home Communities may be an investment to be considered for your portfolio.  Now that you have the "dirt" on these investments, there are qualified professional brokers available to help you "dig" for the right park for your investment needs.

  Anita Bruckner Commercial Real Estate Consultant CHARTER Real Estate Brokerage 130 Linden Oaks Rochester, NY 14625 Ph: (585) 419-7000 Fax: (585) 381-1895 Email: AB@CharterBrokerage.com