Cash Flows From Operating Activities To Net Profit After Tax The Benefits of Owning a Mobile Home Park

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The Benefits of Owning a Mobile Home Park

When you drive past a mobile home parking lot, what’s the first thing that comes to mind? Is it the popular movie “8-Mile” starring Eminem? Or maybe you just shudder – imagining what life would be like if you had to live there. Well, when I drive past the park, I think about economic security. That’s because I have it.

The benefits of owning a mobile home are many – and much more than you can imagine. Here are some of the main reasons why you should have a park:

Cash flow

Mobile home parks make a ton of money. The math is simple. If you have a mobile home park with 100 spaces and the rent for the lot is $250 per month, then you have $300,000 in cash per year. With an expense ratio ranging between 30% and 40% of gross, the annual net income is approximately $200,000 per year. That’s a lot of money coming from just one property.

In the world of commercial real estate, mobile home parks are the king of cash flow.

Appreciation

Mobile home parks pay you twice – once with monthly cash flow and second with the increase in asset value when you sell them. What is the appreciation of the value of the assets? Popular book The millionaire next door he lists the most common traits of millionaire “mobile home owners” below his chart. In fact, there are endless stories of owners who bought parks for around $300,000 that are now valued at $1,300,000. Why do they appreciate so quickly and significantly? Again, it’s the power of volume. If you raise the rent on this 100-unit mobile home park by $50 per month over a few years, then you will generate $50 x 100 x 12 = $60,000 in additional income per year. And at a 10% cap rate, that increased the value of the property by $600,000 just from that one action.

Stability

It costs $3,000 to move a mobile home. Renters can’t afford it. Because of this, mobile homes never move. Because they don’t move, your tenant base and revenue stays the same. When a customer can’t afford to pay the rent, they usually leave the home, which is when you can end up owning it because of abandoned property rights.

The same applies on the cost side. Nothing ever happens in a mobile home park. There are very few items in the budget that are essentially the same every month. These costs include insurance, property tax, water, sewer, electric and mowing.

Freedom

Mobile home parks do not require much management attention. You basically rent the land and don’t have to spend a lot of time watching what your tenants are doing with it. The tenant is responsible for maintaining their plot and mowing the grass, so the park owner really only has to look after the entrance and communal areas such as the playground.

What does that mean? This means that you have a lot of free time. You can choose your hours and go on a tour if you want. There are no restrictions. This doesn’t mean you can just buy a park, forget about it and the money goes into your checking account every month – far from it. But with some intelligent systems—and the right park purchase—owning a mobile home park isn’t a time-intensive endeavor. This also makes it a great addition to your day job, as you can manage the park at night and on weekends.

Help people

Mobile home parks are for “affordable housing”; basically housing for lower income people. About 60,000,000 Americans live on a household income of less than $20,000 – that’s 20% of the total US population. These people have no hope of owning an independent residence other than a mobile home park. A mobile home can provide them with privacy, a yard, and a sense of neighborhood. When you provide a quality mobile home park environment, you are actually helping people. Think you’re doing a good job recycling your newspapers? Try to change people’s lives.

The ability to do good while making money is a real win/win and rarely found these days.

Don’t let the media ruin your chances

For years, the media has portrayed the residents of mobile home parks as a bunch of worthless hillbillies. Jeff Foxworthy made his living promoting such misconceptions. The truth is, people who live in mobile home parks are no different than you and me – they just don’t have as much disposable income. Their children go to school and college, read about world events and go to the cinema. They are not scary. This is a stereotype that the media has embraced because it works to get you to watch TV and read newspaper articles.

Don’t let this unfair portrayal destroy your economic performance.

Conclusion

Mobile home parks mean money. Big money. But they also offer other benefits that money can’t buy. Explore your options regarding the affordable housing industry. You may find that this is your best route to financial security and peace of mind. It was for me.

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