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I lived in one in my younger days. a 2-bedroom single wide.
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Why don't you ask sherkahn?
He's the self described investment expert.
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sherkahn"s also a communist
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There is a large distinction between a trailer park and a trailer home. Most people who live in a trailer home own it but rent the trailer park land it rests on. Despite the name mobile homes are not mobile and so trailer park investors can spike rents or tear the park down. Mobile home residents have no right of first refusal to stop the land they live on from being sold beneath their feet and can not relocate their owned trailer if it is in most cases.
So the answer to your question is trailer parks are a great investment if you have no moral compass and can sleep like a baby to the sounds of homeless children screaming.
Mobile homes are the worst possible investment made to sound as a cheap way to own your own freedom when in reality you are enthralling yourself to the financial speculations of the Carlyle Group or Clayton Homes.
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Are you buying both homes and the park or just the mobile home park?
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I differ with Hey1 here.
Trailer parks are great investments. The biggest issue with most income producing real estate is the maintenance costs. Since the landlord doesn’t own any structures, maintenance is essentially at or near zero. Cap rates (the rate of return if you paid all cash for the property) are also usually pretty high compared n comparison to other income producing properties.
In my real estate investment class in grad school, the professor claimed to own $100 million in trailer parks and said they were one of the best types of income producing properties.
Like any landlord, you don’t have to gouge your tenants to make a good profit and there are often laws in place that cap how much a landlord can increase rents. All of that needs to be factored into your investment analysis.
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Essentially what you're investing in is a parking lot.
The only maintenance would be in the rec room, pool and equipment you've got in it as well as the roads leading to the spaces and the concrete pad.
If it's got a pool I'd highly recommend you have it filled in and put in a 'picnic area'.
Pools are high maintenance and liability.
The main thing would be to have it in a good location.
It's a low maintenance, low $/unit but as long as your profit is somewhere between $40 - $100/unit you should be good.
I know in the apartment buildings I buy after all expenses - piti, maintenance, future remodeling & major upgrades etc I have to have at least $125.00/unit come back to the company.
Figure out your minimum and make sure that's what is coming back to you.
Also check with the city of there's a possibility of building something completely new down the line ie. if you'll be able to get the zoning changed. That will give you more options for the property down the line.
Just my $0.02.
Atticus Finch
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Excellent comment AF!
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You want to own the land that trailer parks are set up on, but you want to do it in places likes Georgia, northern Florida, the Carolina’s, or Pennsylvania where the regulations for trailer parks are friendlier for investors and they also have laws to protect from squatters and other real estate developers. Aim for the older retiree/wandering senior crowd that has money but does not to be tied down to a property for years. Offer longwalker as a “silver senior sex toy”, because he does it for free anyway. Avoid the “trash”, because once you get vermin in they are tough to get out. Worse than squatters.
Also pay attention to local economic developments. My partners and I bought lakeside timberland up river from a mill, because we knew the conditions for quality lumber from that area of Tennessee were going down hill and the mill would fold in a few years. The land is now a trailer park next to eco-tourism.
But it took a months of research, and racing other developers to get deals in place.
Do your homework.
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AF is spot on.
Again the "Trailer or Mobile Home Park" is a very good RE Investment.
A Trailer is personal property that depreciates very quickly/
There is a huge difference if the trailer is in a park or on a flatbed truck.
Trailer & Mobile Home parks are not being developed because the land costs are so high which is driving the price of existing parks dramatically. Also, a lot of City's if they can will buy them to allow them to be part of satisfying the affordable housing requirements under the Housing Elements of their General Plan.
They can also be a very good covered land investment that allows you to generate income until the site may be ripe for redevelopment to a Higher and Better use (more profitable). Be careful to make sure that is an option because to try and close down a MHP can be expensive to relocate tenants.
The investment needs to stand on its own.
Hope that is worth $0.02
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Don't buy where they have tornadoes.
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Don't eat snow where the Huskies go.
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| There are 12 comments on this blog. |
