Author Topic: Operating mobile home/trailer parks?  (Read 4364 times)

Arbor33

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Operating mobile home/trailer parks?
« on: July 03, 2012, 06:29:57 AM »
I've always wanted to get into real estate and recently purchased a duplex. So far, being a landlord is a pretty alright gig. However, I'm starting to think further out and the idea of a mobile home park seems rather intriguing. It sounds like I'd be the mayor of my own little community. Of course, I'm over glorifying it in my mind but it seems like it'd have minimal maintenance since residents would be responsible for their own homes and I'd be in charge of enforcing community rules and infrastructure upkeep.

I basically want to open the topic up for anyone with experience or anyone who might have some good book recommendations, caveats, good stories, etc. Any opinions?

Arbor33

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Re: Operating mobile home/trailer parks?
« Reply #1 on: July 03, 2012, 06:43:10 AM »
I should clarify that I do mean a park where people rent the slab on which they keep their single/double-wide homes and not a drive up, plug in location for Winnebagos. However, opinions on those are also welcome!

tooqk4u22

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Re: Operating mobile home/trailer parks?
« Reply #2 on: July 03, 2012, 09:38:29 AM »
Trailer park, or more affectionately Mobile Home Communities, can be terrific investments for the following reasons:

1.  returns are higher because people don't like trailer parks.
2.  you own the dirt, the tenant owns the trailer, which they pay cash for or mortgage  - so there is at least one (tenant) or two (tenant and lender) that have skin in the game and are incented to keep paying your rent. And lenders in this field never did the zero down thing.  but either way if they don't pay your rent then you can kick them out and more often than not you keep the trailer.
3.  there is limited maintenance because you don't own the structures.

That said there are risks, which increase the lower you go on the income scale.  Ideally you want one that is just outside employment centers so people can work and make enough income to not be in poverty but not enough to be able to afford traditional housing - these are the best trailer tenants.


Arbor33

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Re: Operating mobile home/trailer parks?
« Reply #3 on: July 03, 2012, 10:13:33 AM »
What do you mean when you say ...
1.  returns are higher because people don't like trailer parks.

Quote
That said there are risks, which increase the lower you go on the income scale.  Ideally you want one that is just outside employment centers so people can work and make enough income to not be in poverty but not enough to be able to afford traditional housing - these are the best trailer tenants.

I can see the appeal there. My main area of focus would be on the typical retiree (of the unmustachian variety). Their income is not usually of concern as it typically remains the same. There seems to be a decent market for seasonal parks near bodies of water in NY (doesn't seem to need to be directly on the waterfront). That seems like the optimal setup. They pay their dues all year and only have access to their property Marchish-Octoberish meaning snow removal is moot.

arebelspy

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Re: Operating mobile home/trailer parks?
« Reply #4 on: July 03, 2012, 11:12:06 AM »
Mobile home parks can be cash cows.

It's definitely a possibility on my radar.
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tooqk4u22

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Re: Operating mobile home/trailer parks?
« Reply #5 on: July 03, 2012, 12:22:26 PM »
What do you mean when you say ...
1.  returns are higher because people don't like trailer parks.

As investments they are less favored because many investors don't understand them and are unwilling to spec time to understanding them due to the negative connotation.  Let's say a cap rate on an apartment is 7% then it would be 8.5-9% for a comparable quality mobile home community.  You are right that a senior play is a good way to go but not if it is second home in nature.