How To Make
Money In Mobile Home Parks
By: Frank Rolfe, MobileHomeParkStore.com
Any idiot can buy a mobile home park. And many do. But if your goal is to
make money with it, then there are some simple rules that you must consider
before taking that step. If you follow these guidelines, your chance for
success is 1,000% greater, and your chance for failure is virtually
eliminated.
Stick with affordable housing
There are two different types of mobile home parks out there. Fancy ones and
simple ones. And the fancy ones, contrary to popular belief, do not make any
money. The bullseye in mobile home parks is going after lower income
tenants. They don't have to be downscale and dangerous. But they have to be
folks who make from minimum wage to $10 per hour. To this customer based, a
mobile home park offers an incredible value, where they can have the
security of their own home, and a yard for the kids and dog. And it is the
only form of detached housing they can ever afford.
The more upper-end parks are always in a precarious position. Their lot rent
plus home cost often exceeds $1,000 per month – and at that price, they have
many options. They may buy a mobile home, but will likely grow disenchanted
with it a few months later, and find a stick build home they like better at
the same monthly rate. So they run off, and your continuity of lot rent is
ruined. Even worse, the lender then yanks the foreclosed home out of your
park, and you have a vacant lot with little prospect of re-filling it in the
current economy.
Understand the true economics of mobile home parks
Mobile home parks have their own standard costs and ratios. They are not
like any other form of real estate. Just because you've owned an apartment
complex does not mean you have any grasp of this particular niche. And don't
expect the seller's numbers to shine any light on the subject – 9 out of 10
times they have "cooked" the books better than Julia Childs.
If you want to buy a mobile home park, you've got to know the real line
items for both revenue and expense, and the range of what those should be.
Do spectacular due diligence
Every time somebody calls our website to complain of a terrible park
investment they have made, it always revolves around their lack of due
diligence. Maybe they trusted what the seller said about the property tax,
only to find they were off by 300%. Or they just guessed on the water and
sewer cost and it turns out they were wrong by 200%. Or maybe the whole
operating permit is no good. There's no excuse for these type of problems.
If you do great due diligence, you only buy great deals.
Buy parks that have the right fundamentals for success
Not all parks are created equal. Some have great futures and some have no
future. You have to learn how to spot what makes for a winner and what makes
for a loser. And it's more complicated than just being located in some "Top
10 Metro Areas" list off the internet.
Some of the items that will point towards a winning deal include location,
size, utility system construction, size of lots, road infrastructure,
competing apartment rents, etc. If you do not buy based on the right set of
criteria, you will have trouble making a deal work.
Execute on your plan
Many people buy parks with a good strategy on paper, but can't translate it
into reality due to lack of knowledge on how to properly operate a park.
Running a mobile home park is unlike any other form of real estate. Part of
it is the personality of the customer, and part of it is the unusual set of
responsibilities that a park owner has.
If you want your purchase to work, you need the training to know how to
operate the property effectively, and how to implement your battle plan.
Conclusion
Many, many people have made themselves millionaires through owning mobile
home parks. In the 1990s book "The Millionaire Next Door", mobile home parks
made the list of top tools to amass significant money. However, those folks
knew what they were doing – they took the time to learn about the business,
to perform proper due diligence, and to operate professionally.
Before you invest your money, you need to invest your time in learning the
subject. That's the secret to making money in the mobile home park business.
Go to www.mobilehomeparkstore.com or call (800) 950-1364 and learn all about
mobile home park investing, and our specialty products for investors.
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