Diversify Your Portfolio: The Case for Mobile Home Park Investing

Real estate investing has long been a cornerstone of building generational wealth. With the market ever evolving, savvy investors are exploring alternative investment avenues. One investment option gaining attention is mobile home park investing.

Mobile home park’s are a unique real estate asset class with benefits distinct from traditional asset classers such as multifamily or retail. We believe firmly that informed investors make better financial decisions with greater wealth opportunities.

Financial Investment Objectives

Real estate attracts individuals who are seeking various investment outcomes. Some prioritize consistent monthly returns through rent collections, while other target long-term property value appreciation. Additionally, many investors seek to utilize depreciation as a means of reducing their tax bill.

Mobile home park ownership caters to several of these objective in unique ways:

• Passive Income: Mobile home park ownership allows you to collect monthly rent from residents who own and maintain their own individual homes. The resident purchases the house, then continues to pay a monthly space rent for placing their home on the land which the investor owns.
• High Returns: Mobile home parks have the potential to generate a higher cash-on-cash return compared to other more developed real estate asset classes. Due to resident ownership of their homes, maintenance and expenses are passed to the tenant. This means the owner has a smaller expense ratio, driving higher returns.
• Portfolio Diversification: Adding a mobile home park investment to your existing portfolio offers immense diversification benefits. This asset class generates greater tax benefits due to accelerated “bonus” depreciation which can bolster your real estate portfolio with certain assets focused on cash flow while other assets, like mobile home parks, focusing on tax savings.

Financial Considerations and Breakdowns

• Investment: Mobile home parks typically cost more upfront than single-family homes, yet can be generally be acquired for less than a multifamily property of similar caliber.
• Income: Lot rent from residents is your income stream, yet you can bolster this income by selling off all park-owned-homes to the residents.
• Expenses: Typical expenses for real estate investments include property taxes, insurance, maintenance, mortgage, and potentially management fees should you decide to outsource the day-to-day management of the community.
• Return-on-Investment (ROI): Consider income, expenses, appreciation, and financing costs when determining if an investment is viable with your goals.

Market Dynamics: Navigating Supply and Demand

Traditional real estate asset classes such as multifamily and retail have experienced a period of significant competition, with strong buyer demand pushing prices and potentially limiting investment opportunities for non-established investors. Finding a good deal in traditionally established real estate asset classes can be difficult due to high pricing, high demand, and a limit on supply.

Mobile home parks, however, offer a potentially less competitive landscape. Driven by a growing demand for affordable housing options, mobile home parks offer a great solution. Unlike other real estate asset classes, the supply of mobile home parks is very limited and continues to dwindle. However, we have seen an increase in demand in this space by institutional players, but because this asset class is still underdeveloped, the potential for less competition still stands.

Management and Operations: Balancing Responsibilities

The management responsibilities associated with mobile home parks differ from traditional investments such as multifamily. With MHPs, there is a focus on managing the land itself and the park’s shared infrastructure including common areas, roads, utilities, and other shared amenities. Since the residents own their own homes, they are responsible for maintaining and upkeeping their own individual homes.

It’s important to note that mobile home parks often have specific regulations governing resident rights and park operations. It is vital that you familiarize yourself with these regulations and seek qualified professionals that can help ensure you operate within legal compliance.

Partner with a Mobile Home Park Investment Operator: Comfort Capital

One way to diversify your portfolio with mobile home park investments is to join in with an existing operator such as Comfort Capital. This way you can collect monthly checks, utilize tax benefits, and make a gain on your initial investment position without having to handle the day-to-day operations associated with owning a mobile home park.

Comfort Capital is committed to providing robust returns to our investors through the acquisition, management, enhancement, and growth of our mobile home park portfolio. We invest in opportunities that provide and capture value. If you’d like to learn more about our investment opportunities and would like to capture the countless benefits associated with investing with us, feel free to reach out by clicking on the “Contact Us” tab.