Mobile Home Parks
Mobile Home Parks
Not all too long ago Americans had pensions and retirement funds that allowed them to retire in style or at least comfortably. Pensions have as good as gone away and Social Security alone cannot support American retirees. Each American must now save for their own retirement. Most Americans have little to their names and nothing they can retire on.
According to a recent article in Time Magazine entitled “The Home of the Future,” six out of 10 Americans have less than $10,000 saved. However, some 60% of Americans are homeowners and therefore can tap into their homes for retirement. While many of those Americans cannot continue to live in those homes, they will sell them and move either to lower costs of living places or into mobile home parks. As Time magazine somewhat disparagingly puts it “the sale of a home opens the possibility of trailer park life.”
Note that mobile home parks and trailer parks appear as synonymous in the time magazine article. This suggests a stigma to those parks, a stigma that deters many investors from owning mobile home parks but mobile home parks are a viable business for real estate investors.
In fact, mobile home parks can be great investments. Demographic, economic and societal changes in the United States over the past 20+ years make mobile home parks great alternatives for many renters in the United States. Such renters can include millennials and seniors alike. Given these facts, mobile home park ownership and investing is part of affordable housing solutions. The parks can provide affordable housing. Unlike Section 8 housing, tax payers do not subsidize them.
Lot rents are the basis for mobile home parks, and lot rents have increased. A wide variety of parks exist, some excellent, some mediocre, some in an abominable condition. Perhaps the same is true in other housing categories, whether single-family homes or apartments for example.
However, mobile home park investing can be challenging. The challenges range from being able to find deals, operating the parks well and, and knowing how to upgrade the parks. Large corporate entities like Warren Buffett’s Clayton Homes and YES Communities are buying up mobile home parks.
Any investor with an interest in mobile home park investing must have patience and be persistent. In addition, the investor must learn everything possible about real estate markets in the U.S. and about mobile home parks. The upside is worth it.