Mobile Home Parks Investment Advice Norton MA
Fitchburg , MA
How to Invest in Mobile Home Parks
| How To Invest In Mobile Home Parks|
Wed 01/06/10 09:36:47 pm
by Steve Gillman
Mobile home parks are known for their cash flow, and this will usually grow in time. I asked a real estate agent if the mobile home parks in this area ever are for sale. Almost never, he told me, because they provide so much cash flow that owners don't want to sell. That's worth remembering. Of course you do still have the issues of collecting rent on time and dealing with problem tenants. But look at the leverage you have. If they don't pay, or if they cause problems, they can effectively lose their home. You decide which homes are allowed in your park, and if they have to take their home out of the park, it is expensive. In fact, if they want to sell it, it may be worth $15,000 in your park, but only get them $4,000 from a dealer. In other words, the tenants have a lot to lose if they don't follow the rules. This makes it easier for an owner to deal with the occasional problem. I recently spoke to an owner of a mobile home park in Arizona who had to evict a tenant with the help of the sheriff. He left without his mobile home, and under the law, the owner will soon be able to file for an abandoned property title, and then sell the place to recover lost rent. It's nice to have these options. Cash Flow With Mobile Home Parks Many mobile home park owners have such great cash flow because they have owned the park for a long time. They may have paid off the original loan for the property, and in any case have certainly raised the rent over the years. It may not be so easy for a new buyer to get decent cash flow at the prices that sellers are asking. However, it may be easier than with many apartment buildings or rental homes. This is because mobile home parks are not popular investments. Investors invest for income, but prestige also plays a role in what they buy. It is more fun to say you own an apartment building than a mobile home park, so many will take a lower rate of return from the former. Suppose you are looking at a mobile home park that has 42 spaces, and all but two are rented. The lot rent is $260 per month, although some pay more for pets or an extra parking space. Some income is also derived from the laundry facilities. The current annual income is about $130,000. The owners pay taxes, insurance, electricity for common areas, advertising when spaces are vacant, maintenance on common facilities, legal expenses, and maintenance for t...
Cash Flow With Mobile Home Parks