LoopNet Article - Investing in Mobile Home Communities: Advantages, Challenges and Responsibilities

This is a great, high-level, article to learn a little bit about the pros and cons of mobile home park investing. There are many “gotcha’s” in mobile home park investing that you want to be aware of before going down that path to prevent you from costly expenses or losing the park altogether. If you can navigate those, you can find your way into a lucrative asset category with solid, long term cash flow.

They do mention in the article that parks have become much more expensive than they used to be. In 2013-14 this asset class started to get a lot of attention from former apartment investors who thought the apartment market was getting too expensive. The parks in and around Boise are no exception. While they aren’t trading at the compressed cap rates of apartment complexes (which have now dipped as low as 3.7% in some cases) they are dropping below 7% caps in many cases.

Low interest rates can be blamed for some of this, however mobile home parks often trade without a lender being involved. Many times the owners will carry a loan for the new investor since they have become accustomed to the high cash flow that mobile home parks throw off and don’t want to pay high taxes. High demand for assets with multiple tenants to spread out investor risk is the main cause driving down the returns across multiple asset classes.

If you have more interest in mobile home parks or any other commercial real estate category please give me a call.