Many investors we talk to are very curious about investing in mobile home parks. What's the appeal? Why would someone want to consider investing in them? What's the operational strategy? How are their returns?
We had the opportunity to dig deeper into investing into mobile home parks, thanks to our interview we did with Derek Vickers. As CEO of Victory Real Estate Group and host of the MHP Show, Derek shares his journey from a $300 start in Florida to owning and operating 38 mobile home parks with over 1900 units.
Mobile home parks present an intriguing investment opportunity due to their unique characteristics. Overall, the business is still relatively fragmented, with many mom-and-pop owners. This fragmentation creates opportunities for investors to find deals, especially with sellers offering financing.
One of the key factors contributing to the appeal of mobile home parks is the dwindling supply. Municipalities are reluctant to allow new developments, making existing parks valuable assets. The demand for affordable housing is rising, making mobile home parks an attractive option for residents seeking economical living.
Unlike traditional rentals, tenants often own their homes, reducing the landlord's burden for home-related repairs. As the owner, it's your opportunity to provide a great place where people want to stay. You're focusing on utilities, amenities, and environment.
The affordability factor plays a crucial role in attracting tenants, especially in markets where the cost of traditional housing is high. You're working to help increase your bottom line, yet it still needs to remain affordable to the tenants you have on your property.
Value-add strategies on mobile home parks include optimizing rent collection processes, billing back utilities to tenants, improving the park's aesthetics, and increasing rents. Additionally, converting park-owned homes to lot rent or selling them as handyman specials can lead to significant value appreciation.
You have to do meticulous underwriting, especially when dealing with mom-and-pop sellers with less-than-ideal financial records. It's important to build out a plan for future financials and assess your ability to execute on the plan to hit your desired future financials.
Finding mobile home parks to purchase can be challenging due to the fragmented nature of the business and the lack of comprehensive data. However, here are some effective methods to discover potential mobile home park deals:
Public Records and Health Departments:
Local Municipality Offices:
Derek was able to finance his mobile home park investments, involving investor capital, friends and family, and local banks. Establishing relationships with local banks has been crucial for obtaining financing, especially when dealing with value-add opportunities.
If you want to learn more, watch our full episode from Derek here.