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Pearl Hopes Distinguish Its Ban Filling Mobile Home Lots From - How To Make Money With Mobile Homes Parks – 5 Quick Steps
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.
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
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.
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