Are Mobile Homes a Legit Rental Property Asset?
During tough times, buyers/renters flock to cheaper mobile homes, yet during this long phase of low housing affordability, they are also hunting for rentable mobile homes. This should draw more attention of investors and property managers in 2020.
Some believe there is a high cap rate (estimated at 7 to 10%) in mobile homes and mobile home parks, and they even refer to them as a cash flow monster. Benefits listed below. Buying this type of rental property, and then efficiently managing it with property management software might be a great opportunity for you.
For instance, Equity LifeStyle Properties is the top operator of mobile home communities in North America. They’ve grown from 41 properties and approximately 12,000 sites to 409 properties and approximately 154,000 sites. They offer it all including RV resorts, swimming pools, shuffleboard courts, gourmet kitchens, and other amenities. View their portfolio.
Traditionally, investors may have avoided mobile home parks because of poor property management practices and poor financial records. If you use a good property management software, you gain efficiencies and look good to investors. Management efficiency is the key.
While you may have visions of seedy trailer parks, there are many upscale mobile home communities. Some are within good neighborhoods, are well maintained, and are in attractive, even exotic locales. They can draw high quality tenants such as retirees and those wanting a cheap second home (albeit a rental home).
Easier to Manage
With smaller numbers of units, you could manage them yourself (high some contractors for maintenance) using property management software. For larger scale blocks or whole mobile home parks, you might hire property managers, who also would use the same cloud property management software. EBMC of California is a good example of property managers who know the mobile home market.
The point with the software platforms is that even mobile home residents expect property management services and amenities, or at least good communication. You’ll need a simple software that lets you collect payments, do your bookkeeping properly, and let’s you view your financials in detail.
Should you have a park or a collection or block of rentable mobile home units in your property portfolio? According to Census.gov, there are at least 8.5 million mobile homes in the USA housing almost 18 million people. Due to crippling government regulations, not many are being built, which means those existing are in high demand (and growing).
Buyers and renters would be utilizing mobile homes in bigger numbers if they were available.
Benefits of Mobile Home Investing
There’s a few things to consider that might make a mobile home park very profitable:
- lower purchase price points per unit
- lower business and investment (cash flow) risk with more rental tenants
- lower turnover than apartment buildings
- lower operating expenses and easier to repair if mobile homes are owned
- if not owned, tenant is responsible for repair and maintenance (no interior capital expenditure liabilities)
- lower capital expenditures
- no new construction of competing mobile home parks (government regulations)
some property management challenges (compliance)
- niche renter market
While this is definitely a niche rental property sector with challenges, today’s intense demands for housing keeps rental prices up. Lower operating costs, lower investment prices, and lower property management costs creates good ROI potential.
There is a downside to any investment, but with good planning, quality units to buy, good tenant screening, and a good property management system to help you manage them, you might wash over the negatives.
When you automate rent payment, create a community portal, and manage your bookkeeping via an online property management solution, it becomes an easier business to operate. Mobile home investments might be right for a new property investor.
See also: Property Management | Cloud Property Management Benefits | Rent vs Buy Calculator | Multifamily Property Investment | Tenant Eviction Process | Cloud Property Management Solution | How to do Tenant Screening | Software for Property Managers | Property Accounting Software | Best Property Management Apps | California Property Management | Berlin Germany Property | California Housing Market | Rental Housing Market | How to Reduce Tenant Turnover | Tenant Screening Apps | ManageCasa Property Software