Demand for manufactured housing is boosting the fortunes of companies that deal in mobile home parks
Many people don’t consider mobile home parks to be the next best thing in real estate. In fact, they often overlook this investment opportunity because of historical stigmas that are associated with them. People cite different issues such as being similar to used-car dealerships or motels on the side of the road – this is not the case, instead mobile home parks are an investment opportunity forged in stability and opportunity.
Over the past year there has been an 83% increase in the number of mobile home parks sold that surpass the one million dollar price point. With 19% more buyers residing in the Pacific Northwest, mobile home parks are becoming a special commodity that can deliver stable returns for investors.
Mobile home parks are becoming a sweet spot in real estate and here are five specific things for you to consider:
Demand for manufactured housing is boosting the fortunes of companies that deal in mobile home parks.
Between attractive rental spreads, value-added opportunities and evolving value spreads, mobile home parks provide some of the most predictable returns out there. For the 12 months ending in March 2015, the gross returns for three major home park operators hit 44% according to the Wall Street Journal.
Most people are 400kms away from their investment.
Demand for mobile home parks remain high in both good and bad times.
Recreational properties are still considered a safe long-term investment and almost half of Canadians will do so to improve their lifestyle – despite concerns about increasing taxes, rising interests rates and new regulations regarding high ratio mortgages. This was according to a poll conducted by Angus Reid and commissioned by Royal LePage Real Estate Services.
In fact, with the growth of retirees looking to downsize, snowbirds seeking inexpensive vacation homes and low-income families, mobile home parks are known to offer a lower cost option than traditional homes.
One of the most common excuses investors lean on to justify not purchasing direct real estate investments in their portfolios – is upkeep. We have all heard tales about high maintenance tenants that want help unclogging the toilet, changing a light bulb, unlocking the door when they forget their key. It might seem too good to be true, but mobile home park investing eliminates that dynamic.
In a mobile home park residents generally own their own units. You collect the pad rent. So if they lock themselves out, break something, or want new appliances – that’s all up to them and out of their pocket. You are the park owner and you are only responsible for the landscaping, and any community features you choose to include. But that’s a night and day difference from managing single family homes or low-income apartment buildings.
Real estate is often heralded as a great investment due to limited land and housing stock. Well, there are even fewer mobile home parks. You can actually build more land with man-made islands, and in most areas you can construct or redevelop luxury condos and single family homes. What you can’t do is build new mobile home parks. Local government and developers don’t want to approve them. In fact, many owners of standalone mobile home parks find they can’t replace them once their useful life runs out. Building codes prohibit it. That leaves existing mobile home parks. As these parks have been changing hands from those that have been held for decades to new long term buy and owner supply is decreasing. There is now more demand than there is availability – that means more rising value.
Finding the right mobile home park can be daunting, that is why Klein Group – Royal LePage Sussex specializes in providing a host of services for mobile home park owners: brokerage, property management, and asset management. It‘s the careful execution of these details that enable us to make your project a success – now and for years to come.
