How do mobile home parks stack up against other sectors for investors?
While mobile homes are often looked down on by some newer real estate investors, this asset class continues to make up a sizable portion of the portfolios of the world’s wealthiest billionaire investors. What draws these sophisticated investors to this sector? What metrics are they looking at that may be overlooked by others?
Cost Per Door
One of the most substantial differences between mobile home parks and other property types is cost per door.
The median cost per door:
- Single family home $268,900
- Apartments $30,000
- Mobile homes $10,000
What it means for Investors
Starting out with $268,900 that means investors can choose between:
- 1 single family home
- 9 apartments
- 26 mobile home units/ lots, with $8,900 left over
Take into account the average rent per type of unit:
Average gross annual income for your $268,900 by property type:
- Single family home $14,181.48
- Apartments $103,680
- Mobile home parks $156,000
Which would you rather have?
The Net can be Substantially Different too
What is more difficult and costly to manage; a portfolio of spread out single family homes, or multiple mobile home lots on one parcel? That can make a substantial difference in net profit at the end of each year, and over time.
It’s also worth pointing out that if your 1 single family home tenant stops paying, and it takes 3 months to kick them out, and 3 months to replace them; you’ve lost half of your income for the year. If you lose one mobile home park tenant under the same scenario you only lose 1/50th of your annual gross income.
The Perks of Mobile Home Parks
There are many other perks of mobile home parks too, including:
- Growth potential
- High demand for affordable housing
- Low intensity maintenance
- Availability of seller financing
- Additional tax benefits
There are many advantages of investing in mobile home parks. Among the most notable is cost per door, and the resulting benefits of consistency in cash flow, and overall annual and lifetime returns. These are the facts that the most intelligent and wealth investors in the world understand, and why they are so bullish about mobile home parks as an asset class.