The secret of the mobile home Park investment: to maintain affordable lots

To understand the mobile home park investing, you must first from the term "mobile home" and, instead of from the viewpoint of "affordable housing". The name "mobile home" is inaccurate, homes are only your mobile as soon as they were supplied from the factory. Move the mobile home where they can be moved at all cost around $ 4,000. Therefore ignore for a moment all the stigmas of mental, that the term "mobile home" brings to mind and look for what it represents. The key to understanding this class of assets is to look at the raw power of affordable housing, and how it relates to today's consumer.

Household income for 20% of all Americans is under $ 20,000. It is 60, 000, 000 people. On the basis of the Government's proposed housing cost ratio to the total income-about 33%-these families can afford to around $ 500 per month. But the average apartment rent in 2010 was more than $ 1,000 per month. So where you can live for 500 dollars per month? There are only two options: 1) low rent apartments and 2), MH MH built in parks.

So who wants to live in a mobile home? I guess everyone. Low rent apartments have many features that the tenants find appalling, including 1) high crime 2) constant noise on all sides and above and below you, 3) outside the game space 4) inability to have a pet and 5), no sense of "Community". Mobile homes, however, offer the option to have private, small yard, pet and the actual neighbourhood as the actual Division. MH in MH Park is infinitely more desirable than its housing alternative. Maybe that's why 8% of all Americans living in MH.

The cheapest form of family housing

How to get mobile homes so cheap? In the 1970s, HUD began to regulate the MH, manufacturing industry and the possibility of many construction methods to reduce the cost of the product. Yet the disparity between MHs and traditional stick built home has a lot to do with increasing the value of the "stick built", family houses. As you can see in the following chart, while the MH prices rose during the time of the stick built home prices skyrocketed. In consequence, the new MH costs less than a third of his relative, stick, or about 30 dollars per square metre. Warren Buffet, who is known for its attractive value and low cost-is the largest owner of MH manufacturing and financing in the US, But that's only half the story.

It is a particularly large and liquid secondary market on the mobile homes, in which homes often sold for just $ 1000. These houses are available to private owners such as owners and lenders through park MH repossessions. Consumers can access these homes through traditional newspaper ads, signs on the MH Park façade and oral. If you take in the secondary market, prices per square metre drops as low as US $ 1 per foot. Mobile homes are without question, the cheapest form of family housing.

Understanding MH parks

The second part of the equation in this model, affordable housing is a mobile home park. Mobile home park rents remain extremely advantageous, the average rent in the USA around $ 200 to $ 300 per month. New home for the sum of the mortgage and rent of the lot is around $ 700 to $ 1,000 per month. With the houses, may be as little as $ 300 to $ 500 per month this amount. Affordable rents are as important a part of the model as home prices.

Mobile home park owners money in Mogadishu this low. The ratio of the average cost of mobile home parks is 30% to 40% of gross income. On top of that MH Park owners are basically renting, so that they do not have the expensive capital investment. Mobile home parks to sell for the cap rate from 7% to 10%, so the average owner of the Park is very satisfied with its current performance and has no pressure dramatically increase rent. And the rent increase, it's in increments of $ 10 to $ 20 per month.

One of the bedrocks of the mobile home park as investment tools, is the inability for most customers never leave. For a price of around $ 4,000 move MH from point a to point b few tenants afford to emigrate, though unhappy with the product or the price. This "to" tenants is what allows you to Park owners to enjoy a stable revenue figures and phenomenally in the great recession.

What may be the business model, so bad.

The biggest threat for investing in the mobile home park is losing track of the concept of affordability. Most people would agree that none of the customer, when offered a stick-built house or a mobile home, mobile home. Mobile homes are desirable, in comparison with the apartments, but not in comparison with brick houses in the subdivision. Many investors, however, sometimes forget this rule with the horrible consequences.

In some parts of the United States rents the lot above the level increased to 500 Usd per month, so that the sum of the benefits, rent and mortgages can be more than $ 1,000 per month. To this extent, the cost of mobile home owners have many housing options, which are more attractive, such as stick built houses and luxury apartments. As a result, leave and give up their new mobile home. This destroys the model, the corresponding revenue in the Park and may even endanger its ability to stand firmly on the level of its lease.

Continue to provide affordable housing should be the main objective of MH Park owners, through the danger zone, they had to compete with the more attractive of the housing.

The Conclusion Of The

Mobile home park is a great investment tool, focuses on "affordable housing". Delivers lowest cost form of family housing in the US It is extremely stable tenant base, due to the $ 4,000 barrier to move home. And its the market grows, the pohlcovacu of the US economy.

Take a look at increasing the awareness of this investment niche as an attractive industry investors, such as, for example, Warren Buffet, and Sam Zell, to continue to build awareness of a sleepy, little-known investment options.

Dave Reynolds is considered one of the leading experts in the industry processed housing. He has purchased 100 Mobile Home Community and mobile homes. Dave runs a front page of the mobile home parks and mobile homes for sale, including the largest mobile home Park on the Internet.

Related Articles