Are trailer parks a good investment?

Mobile home parks allow you to acquire more units for less money. It’s the lowest cost investment per unit of any real estate asset class. Most park owners own the land, and not the units themselves. This means the cost of investment is typically a lot less in comparison to the number of units.

Is it smart to buy a mobile home in a park?

Mobile homes placed in mobile home parks typically decrease in value over time. On the other hand, land normally appreciates over time. So, if you own land and build a traditional home or, in some cases even place a mobile home on the land, the value will normally appreciate.

What is the difference between a trailer park and a mobile home park?

With a mobile home park, the manager will typically see the residents of each space only once per month when the rent is paid and anytime there is a problem. However, with an RV Park you may have a new camper in the space every day or every few days. Most mobile home owners have their own showers and toilets.

What are the risks of buying a mobile home?

A disadvantage of buying a mobile home is that its value will depreciate quickly. Like a new car, once a mobile home leaves the factory, it quickly drops in value. Stick-built homes, on the other hand, normally appreciate in value over time because the stick-built home owner almost always owns the underlying land.

How do you value a trailer park?

Estimating the value of a mobile home park is relatively simple, as it’s all based on income. Most mobile home parks sell for a range of 8\% to 10\% cap rates, which equates to roughly ten times the annual net income.

Is a trailer park profitable?

Higher Yields: I’ve found that mobile home parks typically trade at higher yields than most other commercial real estate assets. Low Tenant Turnover: Throughout my time investing in this space, I’ve also observed that in most cases, once a mobile home is moved into a park, that home will stay for many years.

What are the disadvantages of living in a mobile home?

List of the Cons of Buying a Mobile Home

• The value of a mobile home depreciates quickly.
• Mobile homes can be more expensive to finance.
• Mobile homes are smaller than most houses.
• Negative stigmas still exist for mobile homes.
• You must have some kind of land available for a mobile home.

How long does a mobile home last?

30 to 55 years
When installed properly, a manufactured or modular home can last just as long as a regular home built directly on a construction site. And manufactured homes that follow HUD code can last anywhere from 30 to 55 years.

What is a good cap rate for a trailer park?

The average expense ratio for mobile home parks is 30\% to 40\% of the gross revenue. On top of that, mobile home park owners are essentially renting land, so that they do not have to save for expensive capital improvements. Mobile home parks sell for capitalization rates of 7\% to 10\%.