The benefits of owning a mobile home park
When you walk past a mobile home park, what is the first thing that comes to mind? Is it the popular movie “8-Mile” starring Eminem? Or maybe you just recoil in horror, imagining what life would be like if you had to live there. Well, when I drive through a park, I think about financial security. That’s because I have one.
The benefits of owning a mobile home park are many, and much more than you can imagine. Here are some of the main reasons you should want to have a park:
Mobile home parks generate great cash flow. The math is simple. If you have a 100-space mobile home park and the rent for the lot is $ 250 per month, then you have $ 300,000 per year in cash coming through the door. With an expense ratio ranging from 30% to 40% of gross, the annual net income is approximately $ 200,000 per year. That’s a lot of money coming from a single property.
In the world of commercial real estate, mobile home parks are the king of cash flow.
Mobile home parks pay you twice: once with the monthly cash flow and a second with the appreciation of the assets when you sell them. What is the value of asset appreciation? The popular book The millionaire next door He lists the most common traits of millionaire “mobile home park owners” in his chart. In fact, the stories are endless of homeowners who bought parks for around $ 300,000 that are now valued at $ 1,300,000. Why do they appreciate it so quickly and meaningfully? It’s the power of volume again. If you increase the rent on that 100-space mobile home park by $ 50 per month for a couple of years, then you will have created $ 50 x 100 x 12 = $ 60,000 per year in additional income. And at a 10% capitalization rate, that increased the property’s value by $ 600,000 with just that action.
It costs $ 3,000 to move a mobile home. Tenants cannot afford it. As a result, mobile homes never move. Since they don’t move, their tenant base and income remain constant. When a client is unable to pay the rent, he typically leaves the house, at which point he can ultimately divide it into six through abandoned property rights.
The same goes for expenses. Nothing ever happens in a mobile home park. There are very few order lines in the budget and they are basically the same every month. These expenses include insurance, property tax, water, sewer, electricity, and lawn mowing.
Mobile home parks do not require a lot of attention from management. Basically, you are renting a piece of land and you don’t have to spend a lot of time watching what your tenants do with it. The tenant is responsible for maintaining their lot and mowing the grass, so the park owner really only has to worry about the entrance and common areas, such as a playground.
What does this mean? It means that you have a lot of free time on your hands. You can choose your own schedule and take a trip if you want. There are no restrictions. That doesn’t mean you can just buy a park, forget about it, and the cash goes to your checking account every month, far from it. But with some smart systems and purchasing a suitable park, owning a mobile home park is not a time-consuming task. Because of this, it is also a great addition to your day job as you can operate the park at night and on weekends.
Mobile home parks are all about “affordable housing”; mainly housing for people with lower incomes. Approximately 60,000,000 Americans live on a household income of less than $ 20,000, or 20% of the total population of the United States. These people have no hope of having a separate home other than a mobile home park. A mobile home can provide privacy, a garden, a sense of neighborhood. You are actually helping people when you provide a quality mobile home park environment. Do you think you do well when you recycle your newspapers? Try to change people’s lives.
The ability to do good while making money is a true mutual benefit, and is rarely found today.
Don’t let the media spoil your chances
The media has for years portrayed mobile home park residents as a group of worthless peasants. Jeff Foxworthy has made a living promoting these misconceptions. The truth is, people who live in mobile home parks are no different than you and me, they just don’t have as much disposable income. Her children go to school and college, read about world events, and go to the movies. They are not scary. That’s a stereotype that the media has embraced because it works for you to watch TV and read newspaper articles.
Don’t let this unfair description ruin your financial performance.
Mobile home parks mean money. Great money. But they also offer other advantages that money cannot buy. Explore your options regarding the affordable housing industry. You may find that this is your best chance for financial security and peace of mind. It has been for me.