Investing in mobile home parks can provide real estate investors with solid financial returns. Here’s how and why to look for a mobile home park for sale.
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Why Invest in Mobile Homes
Mobile homes, also known as manufactured or factory-built homes, have been around for decades, but continues to grow in popularity as the affordable housing crisis mounts. About 22 million Americans live in mobile homes, according to the Manufactured Housing Institute, a mobile home manufacturer trade organization.
Mobile homes are also affordable. The average new mobile home sells for $70,600. Affordability is an important consideration as rising home prices make it harder for people to buy conventional homes.
Conventional, site-built homes cost about $107 per square foot on average, according to the Manufactured Housing Institute. Manufactured homes cost less than half that, about $49 per square foot on average.
They’re in high demand
There are nearly 40,000 mobile home communities that lease lots to the owner-occupants of the homes. These trailer parks include about 4.2 million home sites.
These mobile parks are attractive investment opportunities.
Returns are high
Many have cap rates of 10 percent or higher. That suggests mobile home park investing can generate higher returns than conventional single-family or multifamily investments.
Maintenance is reasonable
The average mobile home resident sees a 3 percent increase in rent each year, the Manufactured Housing Institute reports. And mobile home parks require relatively little maintenance compared to other residential real estate opportunities.
Best Places to Find Mobile Home Parks for Sale
Some of the best places to find mobile home parks for sale include online listings sites. Real estate brokers that specialize in mobile home parks are also good sources. You can also find mobile home parks that aren’t for sale but whose owners could be convinced to sell.
Finding off-market mobile home parks to buy is more trouble than browsing listings or talking to brokers. These off-market properties can represent good bargains, however. This is because there won’t be as much competition from other buyers.
Finding Mobile Home Parks Online
There aren’t nearly as many mobile home park properties as there are conventional single-family and multifamily residences. So listing sites such as Realtor.com and Zillow aren’t the first place to look for mobile home park investments.
MobileHomeParkStore is an all-mobile-home-parks listing site. It claims to have more than 1,000 listings of parks for sale in every U.S. state. These listings include For Sale By Owner (FSBO) listings as well as listings from commercial real estate brokers.
The site also has foreclosed property listings and bank-owned real estate. To find a property on MobileHomeParkStore, use the advanced search. You can search by location, price range, number of lots, and whether it’s an all-ages or 55-plus park.
The listings may include information such as year built, total occupancy, average rent per lot, and size in acres. Other sites such as Loopnet may have more financial details. But MobileHomeParkStore appears to have the most for sale listings.
Loopnet is the largest commercial property listing site. It lists more than half a million office, retail, warehouse, industrial, multifamily, and other types of properties. Mobile home and RV parks is one of the types of property you can search for.
The site has more than 500 mobile home RV parks listed at any time, according to the site. To use the site, select mobile home and RV parks as the property type. Then select a state. Choose the for sale option. Listings provide lots of detail.
Basics such as price, lot size, number of units, and photos are on most if not all listings. Investors will also often find total revenues, cap rate, and average occupancy. Other details may include whether utilities are separately billed, whether the roads are paved, and more.
BizQuest is a site with listings of businesses for sale. Some of those businesses are mobile home parks. A BizQuest search for a mobile home park starts by selecting businesses for sale, then selecting real estate.
Enter a state, county, or city to search in. If there are park listings in that location, on the right an option for “Mobile Home Parks for Sale” will appear. Clicking that will pull up the appropriate listings.
BizQuest listings may include more financial information than other sources. In addition to the asking price, listings may show dollar figures for gross revenue, cash flow, and earnings.
Mobile Home Park Brokers
Some real estate agents and brokers specialize in mobile home parks. For instance, Mobile Home Park Broker is an Atlanta-based broker specializing in the southeastern United States.
These brokers do not have as many listings as the online real estate sites. Also, the available information online may be limited.
For instance, you may not be able to learn details beyond general location, a brief description, and price without contacting the broker. However, brokers offer more than online listings do. Brokers may have pocket listings. These are mobile home parks that are for sale but haven’t been listed publicly.
Brokers will qualify buyers, confirming interest and ability to buy, before telling them about these listings. This can be a way to find properties that other potential buyers don’t know about. This may even lead to a lower price.
Brokers also help with paperwork and necessary tasks such as inspections and surveys. Brokers may even be able to connect buyers with lenders who are active in financing mobile home parks.
Off-market properties are mobile home parks that haven’t been listed with any listing site or broker. Often the owners aren’t even actively considering selling. However, some owners of mobile home parks can be convinced to sell if they get the right offer at the right time.
The catch is that it can be much more difficult to identify these owners. One way to do it is by using tax records to identify the owners of mobile home parks. Then the investor can call or write to the owners asking them if they’d be willing to discuss a sale.
Another way is to simply drop by the mobile home park and ask to see the owner. Obviously, this is the most time- and energy-intensive way of all. However, the payback for cold calling to find off-market properties is less competition from other buyers.
The result can be an attractive purchase price and a more rewarding investment. If you do go down this road, be prepared to be rejected. But it certainly never hurts to try!
Other Ways to Find Mobile Home Parks for Sale
Mobile home parks come up for auction just as other real estate properties do. If the owners get too far behind on mortgage or tax payments, they can be foreclosed on.
Foreclosed properties are often sold at auction to the highest bidder. These auctions can be good ways to acquire properties at relatively low prices. One online site with auction listings is Auction.com. This auction site has foreclosed and bank-owned properties.
You can search by a number of variables, including location and type of auction. However, there’s no filter for mobile home park listings. One way to find mobile home parks up for auction on this site is to use the Google search tool.
Enter “mobile home park site:auction.com” in the search box and press enter. This search will turn up Auction.com listings of mobile home parks for sale, including some from other sites. Adding city or state location can fine-tune the results.
You can also find mobile home parks for auction on eBay. Search for “mobile home park for sale” in the “real estate” section. You can enter a lowest price figure of $75,000 to screen out most individual mobile homes. An eBay search can turn up FSBO parks for sale that aren’t listed anywhere else.
Since EBay is a general product site, the information on the site is limited. There also are not many mobile home parks listed on eBay. However, those that are may be overlooked by other potential investors. That can present an opportunity for the creative and resourceful investor.
Developing relationships with business owners who provide services to mobile home parks can also provide a lead on a park for sale. Contractors who work on mobile homes and mobile home parks may learn about owners’ plans to sell before anyone else.
Mobile home dealers, lenders, and brokers are all good people to cultivate and communicate with regularly. So are park managers. These relationships can alert investors to potential opportunities well before the competition hears about them.
Common Mobile Home Investor Mistakes
Mobile home parks are not quite like any other real estate investment. They have some special quirks that investors need to know before they get involved. First, although mobile homes by definition have wheels, they’re not all that mobile. It costs several thousand dollars to move a mobile home.
The cost to move a mobile home means that when occupants own the home they are reluctant to move. This gives mobile home park owners some extra flexibility when it comes to lot rent increases.
Second, mobile homes have an image of being strictly for low-income residents. While this is often true, it is not always the case. In some areas of the country real estate prices are so high that conventional homes are too costly for many buyers.
In these markets, mobile homes are seen as acceptable and affordable residences by middle-class and more affluent people. Also, retirees are increasingly considering manufactured homes as less expensive options than site-built housing.
Especially in retirement-friendly areas of the South, all-senior mobile home parks may be occupied by relatively well-off retirees. The lure for retirees and people stuck in high-cost markets is the low cost.
The average monthly gross housing cost for a mobile home is $564, according to Apartment List. That compares to $1,057 for a site-built home or apartment.
This holds true in big cities as well.
In the 100 largest metros, Apartment List reports that housing costs average more than 40 percent lower for mobile homes compared to other housing in the same market.
Things to Consider when Buying a Mobile Home Park
Mobile home Parks offer unconventional options for real estate investors in search of high returns. Online listings, mobile home park brokers, and cold calling are some of the most common ways investors find properties for sale.
There aren’t as many mobile home parks as conventional single-family and multifamily properties. But there are still plenty of opportunities for resourceful investors looking for mobile home parks for sale.[ratings]