Mobile Home Park Investing Simplified

Introduction

Mobile home parks can be described as passive investments that require no more than four hours per week of time, or as labor-intensive businesses that you need to watch like a hawk. It just depends on who you ask, and also on the type of park you are referring to. Mobile home parks come in all shapes and sizes, so the quality and location of the asset plays a major role in determining how much work a particular park will require. This article will lay out two of the primary ways a new investor can acquire a mobile home park.

Option 1: Purchase And Operate Yourself

Purchasing a mobile home park yourself can seem like the best option in order to maximize your returns, however, if you have no experience owning parks, there’s no guarantee you make money. Purchasing the wrong park could even cause you to lose money, so it’s extremely important to get educated and do research before trying to tackle a mobile home park on your own.

Here are some of the essential steps you should take before and after closing on a home park.

Pre-closing

• Perform research on the market
• Underwrite the park thoroughly
• Perform extensive due diligence
• Qualify for financing, if needed
• Source capital, if needed

Post-closing

• Take over park operations
• Determine the right strategy for the park
• Hire qualified on-site management and contractors
• Perform the most pressing capital improvements first, and those that will have the greatest impact
• Find reliable labor for home renovations and repairs (easier said than done)
• Be actively involved in mobile home sales, licensing, bookkeeping, accounting, taxes, and other activities

After successfully operating the park for a year or more, making improvements, reducing expenses, and improving the resident experience, your park should be relatively stabilized and producing consistent cash flow. This is when you will begin to reap the true benefits of mobile home park ownership.

Option 2: Partner With An Experienced Operator

What is a mobile home park syndicator?

A mobile home park syndicator (a.k.a. a “sponsor”) is a person or company that offers passive investment in mobile home parks. The sponsor is responsible for finding the deal, performing all the due diligence and post-closing tasks, overseeing/managing the operations and property improvements, and the monitoring the overall performance of the investment. The investor’s only responsibility is providing the capital to fund the deal.

Working with a sponsor that has a proven track record and expertise the areas mentioned allows a passive investor to enjoy the mobile home park investment experience without being hands-on or dealing with problems that may arise.

Benefits Of Investing Passively

Investing with an experienced syndicator allows investors many benefits they may not have received if they had purchased a park on their own, including:

• Access to better deals: Syndicators devote countless hours to searching for deals off-market, which typically leads to purchases with more favorable price and terms.
• Lower investment requirement: You don’t need to save up 100% of the down payment, you can simply invest what you have and own a piece of a much larger asset than you could purchase on your own.
• More free time: Passive investing gives investors more free time to focus on their family and personal life, while the day-to-day tasks are all handled by the syndicator.
• Lower risk: Investors are able to leverage the syndicator’s experience to avoid costly mistakes and unforeseen pitfalls.
• Higher returns: Larger parks create economies of scale that help reduce expenses and increase overall cash flow. It’s not unrealistic for a passive investor to make more via a syndication than they would on their own.

Summary

Many investors find that a passive investing with a syndicator is the most hassle-free way to invest in the mobile home park space. It allows them to enjoy the benefits without having to do the hard work, and in some cases, they will experience better returns than they would on their own.

An honest and trustworthy syndicator who provides passive mobile home park investment opportunities is who you should seek out if you feel Option 2 is best for you. Don’t jump at the first syndication opportunity you come across, and instead take ample time to vet the sponsor, so at the end of the day you have the confidence that your money is in good hands.