A mobile home park is a viable investment in the current economic cycle, according to a recent article in Bloomberg News. In fact, the return on the investment can be as high as 20 percent per year, with parks throughout the country trading at 7-10% CAP Rates.
About six percent of Americans live in mobile homes. Enterprising owners are getting rich renting the concrete pads and surrounding dirt on which residents park their homes, says the article.
Cities are banning new mobile home parks, because inhabitants:
- Are poor
- Pay little in taxes and drain resources.
Demand is “higher than ever,” because:
- So many people never got back on their feet after the recession.
- Mobile home parks provide an alternative to high rents and even higher traditional home ownership costs. ”
- Buying the park and renting the space can be lucrative, even in an economic downturn.
People who invest in mobile home parks are not in competition with the kind of people typically involved in high technology and high finance. The atmosphere is more relaxing and less competitive than other kinds of investments. The investment is in the park land and lots and not the homes themselves.
People purchase mobile homes inexpensively, but have to rent space somewhere. They pay rent to essentially locate their home within the park itself. The monthly rent on a mobile home is cheaper than renting an apartment in most cases.
When thinking about the rehabilitation or re-use of mobile home parks within city limits, consider that:
- These residents and property owners should not be forgotten as a housing class.\
- There are opportunities to provide quality housing via mobile home parks.
Andrew Gee is a Senior Associate at RSG