I know, I know, there is a lot of information out on the web about this. But I’m going to let you know the high-level simple answers to this. These basic answers to the question of why investors like mobile home parks should give you some understanding of why this product has been so appealing.
Advantages of investing in mobile home parks
It can be a passive investment.
You will notice I put that it “can be” a passive investment. If a park holds the ideal characteristics of city utilities, income derived from land leases, a location close to a growing metro, and a locale with a high median home sale price, it is passive, in my opinion. Why you may ask. First, the city utilities will have lower maintenance requirements from a well and septic system. Land lease income comes with fewer strings than having to rent out a structure for rent. A growing metro has a natural supply, so advertising demands are small. And median home sale prices being high creates a natural value for individuals looking for affordable housing. Savvy investors can find silver linings in these properties when all of these criteria are not met, but we’ll save that conversation for an article down the road.
A high barrier to entry.
Developing a ground up manufactured housing community is not easily done nowadays. While new communities are still popping up, most likely, you will not buy a park where you have to worry about someone putting up a newer and shinier one than you a few years later. Consumers who prefer to live in a detached living arrangement typically have few options to move into different communities years down the road.
Affordable housing demand.
Manufactured homes are becoming a lot nicer than they used to be. Their value to individuals looking for housing is becoming greater and greater. To such a point where I believe the stigma of living in a manufactured housing community in the next 10-15 years will be reduced to a degree. With the quality increasing and other housing options creating financial hardships for individuals, this option will be an excellent opportunity for lower to middle class America. Housing for lower to middle class America is not easy to find, especially in high-growth metros. While the industry may face headwinds when it comes to manufactured home costs and rising interest rates, I believe they will weather the storm because stick built homes, condos and apartment buildings are all facing the same issues. So one product type will not have a distinct advantage over the other when competing for customer acquisition.
Looking to invest in mobile home parks? Check out our mobile home park listings or contact us for a consultation.