What’s the difference in investing in mobile home parks locally versus out of area, and even out of state?
Access to more data, technology, and contacts than ever before now enables real estate investors to effectively invest in and hold properties virtually anywhere in the world. So with such great freedom, and no barriers what are the pros and cons of sticking close to home versus further afield? What’s better, and why?
The Challenges of Investing Close to Home
Some investors will find they have great mobile home park investment options close to them. These definitely should not be ignored. Aside from the close proximity and potential knowledge of the area, there can be other benefits of investing in your home town too. This may include positively influencing the property values of any other real estate you own (if you do an amazing job at property management). Then there can be other than monetary benefits such as improving the local community and economy and helping others.
However, there can be pitfalls of staying local too. This includes:
You may be in the best mobile home park market in the universe. If so don’t overlook those deals close to you. But since the whole world is your oyster, don’t suffer inferior returns, or forego the need for diversification. Demand the best investments, with the best returns, in a strong portfolio.
The DIY Management Trap
Perhaps the worst part of staying local is the potential to fall into DIY style self-management. This notoriously traps many, even among those who didn’t plan to get involved. There is just too much temptation to stop by, answer the phone, and try to fix it yourself. That can create all types of bad habits, confusion, and issues.
Privacy & Security
Some investors like the ego boost of being known as the big land owner in town. For others the spotlight is a nightmare. Most investors fail to put enough cushion between them and others. That means they can easily be looked up and hunted down by irate tenants, and the attorneys of malicious fraudsters and opportunists.
Unsustainable Investment Model
Those that fall into the DIY property management trap face even bigger issues later on. Eventually most investors will move. They may move for better weather in retirement, to be near family, or to downsize and be close to good healthcare. Then who is going to manage the investment. If you haven’t built in enough margin to cover hiring a professional third party management firm that could mean a negative cash flow situation which begins to eat into previous gains.
The Benefits of Investing without Borders
Investing with a full map doesn’t mean ruling out mobile home parks that may be right down the street. It simply means keeping every option open so that you can invest in the very best deals, anywhere.
Some of the perks of this approach include…
Finding the Right Match in Price Points
For some the biggest need is to find mobile home parks in the right price range. For some this is smaller, more affordable parks to get started, or to diversify when using a 1031 exchange from a sale. For others it may actually be finding more expensive parks to move up to.
Finding the Best Matching Properties
Following on from the above; it isn’t necessarily about finding ‘better’ properties, or the ‘perfect’ property. It is about finding the best match for you. With more options mobile home park investors can find the right matches for their individual goals and timeline. For example; perhaps you are looking for undervalued opportunities that you can add value to. Others might be searching for parks needing little work, and which already have strong cash flow.
Investor Friendly Locations
There can be a dramatic difference in risk, liability, and net returns, between locations. Some states, counties, and cities are far friendlier to landlords, business owners, and investors than others. Find those places to invest.
Diversification is a must for every individual who is serious about their finances and financial future. Period. You can’t truly diversify effectively in only one city of region. Keep your options open and invest broadly.
Best Destinations Right Now
It’s no secret that all real estate is local. Every micro market is turning on its own cycle. With more options mobile home park investors are able to seize on the ripest markets at the best moments, for maximum results.