Mobile home park investing is not an exciting cryptocurrency, a high-flying tech startup or a trophy office tower you brag about owning. A mobile home park is just a parking lot filled with single- or double-wides that kicks off a lot of cash flow.
I co-own a portfolio of 23 mobile home parks and help real estate investors grow their portfolios with mobile home park investments. There are a lot of unique aspects to the industry that make mobile home parks compelling investments. But, for some strange reason people do not gather around me at parties to learn about the intricacies of them. So, to keep your attention, let’s focus on just one strength most parks share: consistency.
A portfolio of mobile home parks purchased at the right price is a remarkably bankable investment. Mobile home parks deliver profits year in and year out, whereas their cousins (apartment buildings) are often far more erratic. Why?
Compared to apartment buildings, mobile home parks tend to:
• Have dramatically lower turnover: Only about 2% of the homes leave our parks per year, versus the average apartment tenant yearly turnover, which was 53% in 2015.
• Have lower operating and capital expenses due to fewer maintenance costs and amenities: We rent land, which is pretty cheap to maintain.
• Have less volatile rents due to reduced competition. There is essentially no new supply of mobile home parks. Strict zoning laws make them nearly impossible to build. Compare that to apartments buildings, of which more than 350,000 new units were built last year. That’s a never-ending supply of new competition for existing apartments. That sounds horrible. Who wants to go out in the cold and slay a new dragon every year? I’d rather be back at the castle by the fireplace counting land rent.