Mobile Home Parks 101

It’s challenging to find a quicker, easier, more attainable and voluminous way to reach financial freedom than through mobile home park investing.

Securing just one mobile home park (depending on your ownership percentage, the parks size and financials) can make you financially free. Two to three mobile home parks should most definitely make you financially free. And five-plus parks should make you down-right wealthy. It’s really not that hard to secure a few mobile home parks. Especially in comparison to slaving at an office desk as an employee until 60-plus years of age and then retiring with no money!

So, what’s a Mobile Home all about anyway?
Before we can understand what, a mobile home park is, first we must explore what a mobile home is…

A mobile home is one of the cheapest types of homes on the market. They are cheap because they are mass produced, factory-built homes. Put together using cheap, light and thin materials in a production line system, like the assembly of cars. This is done in a controlled environment, free of wind, rain and snow, with the assistance of forklifts and overhead cranes. Due to these controlled assembly luxuries, you can easily see the cost advantage over site-built homes.

A finished home is placed on a flatbed truck and transported to a location where the home will be placed. Although a mobile home is technically mobile, it’s actually quite permanent once it’s set in place. You see, most mobile homes need to have some type of foundation that the home sits on, then the home itself is tied or strapped down and semi-permanently fixed in place with skirting to cover the foundation beneath.

Sure, a mobile home can be moved to its next location, but transporting a mobile home is hard on its weak structure, and it also can cost upwards of $5,000 to pack down, transport, and then set up. Most people who live in mobile homes don’t have $5,000 just lying around, so typically, once a home is set, it stays in its first location for the remainder of its life cycle.

And a Mobile Home Park?
A mobile home park is essentially a colony of mobile homes on a single-owned piece of land. Once the mobile homes are placed, each tenant then pays lot rent to the landowner (the park owner), for the privilege of letting their home sit there where the tenant then typically has access to water, sewer, electricity and/or gas.

How does a Mobile Home Park work?
When I first found out about MHP’s, and that tenants owed rent to the park owners for renting a home, that totally made sense to me. It’s the same concept as renting an apartment, except you get the upside of not having to share walls or floors with anyone (more privacy), plus you have your own yard. This seems much better than all the noise you hear from neighbors and the tiny balcony you get (if you even get one) in an apartment building.

The thing that caught me off guard is that, contrary to Apartment living, in a mobile home park, a tenant can own their home. When a MHP tenant own’s their home, they don’t have to pay any home rent, although they still do owe “lot rent” for having their home sit there.

You don’t have to look to deep at the reasoning behind landlords charging a small lot rent fee, to see it makes perfect sense. The average MHP lot rent in America is still under $300 a month. Most monthly car payments are higher than that. This is why mobile home park living is among the most affordable housing in America.

What does this $300 or less per month give to someone who already owns their mobile home? For less than $300 a month a park typically provides at minimum; water and sewer lines, roads, signage and letterboxes. Landscaping and tree trimming of common areas is maintained and trash collected. The landlord administers onsite and offsite management of the community to upkeep a certain quality standard and ensure city, county and state codes and ordinances are met, and park rules and regulations are followed,

If utility systems are park owned, rather than city owned, the park is then responsible for any private system they own such as, water, sewer, electrical and/or gas. This may mean maintaining a water well, septic system, packing station or lagoon. In the case of owning private utilities, landlords may also be subject to installing utility meters, complex meter reading and/or utility billing. These things are not only provided by the park, they are also maintained by the park, which means the park owner must fork out repairs and maintenance expenses and capital expenditures.

A park owner takes on all the risk and management to facilitate all the above, and for less than $300 a month per lot. If a tenant were to take all these financial responsibilities on him/herself, it would more than likely cost them in excess of $300 per month to, own the land and maintain all the utility systems. Not to mention qualifying for a loan for the land in the 1st place.

All the above for less than $300 a month? From a tenant’s perspective, especially in the affordable housing space, you can’t tell me that’s not a phenomenal deal!

Trailer Parks & Trailer Trash Myth
You may have heard or thought before that, mobile home parks are like Trailer Park Boys. You know, the whole white trash thing, like those Jerry Springer shows. Didn’t Eminem grow up in one of those places? Isn’t that where most of the COPS episodes were filmed? Deep in thought, you picture a group of odd-looking middle-aged men, with sloppy, greasy, half-ripped clothes, drinks in hand, who are barbecuing in the bottom of an empty and moldy swimming pool, with a panoramic view of cars jacked up on bricks, and engine block on the ground beside it. Maybe you see a kid in a diaper riding his tricycle in circles, a man yelling at his drunken wife on the porch of his burnt-out trailer, and a robust landscape of discarded washing machines and dryers with plants growing out of them.

Even if you find a slight bit of truth in this on very rare occasion, this trailer trash perception is mistakenly not the reality in most mobile home parks in America today. A large percentile of mobile home parks appeal to good, hard-working families. Most park owners have working class families who own their own home, have their own yard, get along with their neighbors and take pride of ownership in their home, yard and community. I only focus on desirable mobile home parks. If a mobile home park is not extremely desirable when I first purchase it, it will be by the time I’m done.

The days of slum-lord park owners is almost over. Old moms and pops and slumlords alike, have made way for more professional, business-oriented folk like me, who take average parks and turn them nice. This increase in nationwide mobile home park quality has brought much attention to this asset class, turning it into one of the hottest, most desirable asset classes today.

Warren Buffet join ship with Berkshire Hathaway’s acquisition of Clayton Homes, the largest mobile home manufacturer in America. With the introduction of 21st mortgage and their CASH program, which provides 3rd party financing for tenants and allows park owners to bring new homes to their communities for next to nothing. FANNIE and FREDDIE offer mobile home park financing programs. A bill has passed, allowing “Section 8” vouchers to be used towards mobile home purchases (Not just rent. Yes, purchases!) Multi-family apartment and self-storage investors are migrating to the mobile home park space to benefit from more favorable cap rates, lower operating expense ratios and higher spreads.

To learn more about the ins and outs of mobile home park investing, how to avoid pitfalls and maximize profits, all from the comfort of your own home: Get your hands on the “A to Z of MHP’s – everything YOU need to know about mobile home park investing – Home Study Course!

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With Gratitude,

Bryce Robertson

“Your Australian Real Estate Mate”

Real Estate Investor | Best Selling Author | Syndicator | Educator