It’s true that owning a mobile home park can prove to be a profitable investment. However, there’s a lot to think about before tackling this new venture. As with any opportunity, you’ll find pros and cons that should be carefully weighed and considered. To begin with, it’s important you assess your capabilities as a leader and entrepreneur. You’ll also need to think about the amount of work needed to find and maintain the mobile home park that’s perfect for you. In this article, we’ll help you figure out if owning a mobile home park is right for you.
Your time commitment
Available mobile home parks don’t just pop up overnight, and settling on the right one for you could take months to years. One of the great things about the mobile home park business is that there’s not a lot of competition. However, this can also create a barrier for new entries. You’ll need to be committed to finding the right park, which requires a lot of legwork and research.
And the time commitment doesn’t end there. Even when you do find an available park, there are a lot of questions you’ll have to ask yourself before buying. For example, what does the local economy look like in your surrounding area? Is your park in a location that’s susceptible to flooding or hurricanes? How does the condition of this park compare to others? Asking yourself these questions beforehand could save you a lot of time and money down the road.
Your experience level
Most mobile home park owners hire on-site managers to take care of the day-to-day operations. However, this doesn’t mean that you should hand it all over. Owning a mobile home park means you need to understand how to run and operate it yourself. Remember, this isn’t going to just be a side-hobby. While you may rely on your team, you’re going to want to learn as much as you can for yourself.
Of course, assembling a competent team is no easy feat. And you won’t be able to generate a steady cash flow until you have your on-site manager and the rest of the team helping you run your mobile home park. But you can’t hire just anyone. The only way you’ll know if you’re hiring able employees is if you’re well-equipped yourself.
It’s important to remember that unexpected expenses will be coming straight out of your pocket. Consequently, having a good amount of money in reserves is a must for future mobile home park owners. While the tenant is responsible for maintaining their own home, you are responsible for maintaining the land. An unexpected natural disaster could leave you in loads of debt if the cost of repairs is high enough. You’ll also want to have money for the off-chance that one of your tenants ditches their mobile home and leaves you with the bill.
The benefits of mobile home park ownership
You will most likely own the land, not the units
As we’ve already mentioned, most mobile home park owners are only responsible for maintaining the land that tenants live on. This is a huge perk as you won’t have to worry about individual unit upkeep. Carpet repairs, holes in walls and damaged furniture are none of your concern in most cases. There’s also a much lower rate of tenant turnovers as mobile home owners can’t just up and move their home overnight. Moving expenses aren’t cheap, making it more challenging for a tenant to leave the park.
Mobile home parks are recession-proof
There will always be a need for affordable housing, and a mobile home park provides just that. In the US Census, it was reported that 6 percent of the population (or 20 million people) currently live in trailer parks. It’s pretty much a guarantee that you will have interested paying tenants so long as you keep your lot in good shape. You also won’t have to worry about competition moving in next door as there aren’t many new parks being built.
There’s less risk involved
In addition to being recession-proof, mobile home parks are low risk. Profits stay fairly consistent due to the high volume of homes that can fit in a single lot. Let’s say you own a park that can fit 50 mobile homes. If three tenants stop paying their bills entirely, you’ll only be losing 6 percent of your overall profit. This drop in profit would be astronomically higher if you were managing a traditional apartment complex with 10 units. Even if you lost one of those 10 units in your apartment complex, you’d lose almost double the percentage of your profits in comparison to losing three mobile home units.
The downside to owning a mobile home park
The cost of eviction is high
Whether you’re managing a traditional apartment or a mobile home park, there’s a good chance you’ll be dealing with some unruly tenants. Evicting someone from a mobile home park is a huge feat as you’ll have to physically move the tenant’s home as well. This could prove challenging if a tenant doesn’t comply with your request. Additionally, it could leave you with a big hole in your wallet if you have to pay the moving fee yourself. Keep in mind that you’ll have to deal with some difficult residents along the way.
Lower quality parks will require more attention
The amount of time you’ll have to dedicate to maintaining your park will vary depending on where you settle, and you’re going to find yourself working longer hours if your park is in bad condition. Even the best parks will require a lot of work if a flash flood or hurricane rolls through your area. A good park manager is someone who can roll with the punches and keep a level head when the unexpected happens, so don’t go into this business if you’re not that kind of person.
At the end of the day, you’re the one being held accountable
Don’t take on the responsibilities of a mobile home park owner if you’re not comfortable leading a team and taking ownership of a business. While you may have an on-site and off-site manager running the day-to-day operations of your park, you’re still the person who is ultimately responsible for the good and bad that comes along with running a park.
Now the decision is up to you
We hope these pros and cons helped you decide whether or not owning a mobile home park is right for you. It isn’t easy to make the leap into this industry, but there are plenty of advantages to consider. Are you a leader? Are you willing to work hard and get to know the business? If so, then you’re already well on your way to being a successful mobile home park owner. Read this article to learn how to open your own mobile home park.