Tuesday, April 1, 2008

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How to invest in mobile home parks

Posted: 31 Mar 2008 10:26 PM CDT


Mobile homes are a great way for those with low incomes to own their very own home. Manufactured homes have changed considerably in recent years and have improved in quality and are overall much nicer than before. Mobile homes are not necessarily even for the underprivileged any more. In Aspen, Colorado, for example, there is a mobile park where buyers pay an average of $500k for a single mobile home!
The easiest and most obvious way to get started making money with mobile homes is by buying low and selling high. To start with, you will need substantial cash reserves in order to purchase the property. If you don’t have the money or credit to secure financing, then consider borrowing the money from a partner. You can borrow the money on terms that pay 15% or 20% interest. This may seem high but it’s okay because you won’t be holding on to the property for very long and you need a much higher than normal interest rate to attract business partners. A CD or bond only pays an average of 6% right now so you need to offer several times that amount.

If you’d rather own a long term asset than purchasing an entire mobile home park is a much better option. With mobile home parks you actually have two sources of rental income; the land and the mobile home itself. Those who move into the park have the option of either renting the land and the mobile home or of buying the mobile home and renting the land. Whatever they chose to do, you earn rental income either way. The rental income earned from a Mobile Home Park is stable because the home can not be taken out of the park until after it has been paid for.

Once you’ve decided to purchase a park and hold on to it, you can earn even more on your investment by improving the park. Improvements don’t even necessarily mean making physical renovations. Suppose you increase the rental income of the property by just $200 a month. This adds up to $2,400 per year increase in rental income which increases the value of the property by about $20,000. Improving the market value of the property is kind of like a long term flipping strategy because you are essentially flipping the property for a profit but it can take it can take a little more time for the profit to be realized. For more information you can visit recursion site.

As great an investment as mobile home parks are, they do have a dark side. Mobile home parks have notoriously bad, unruly tenants. Most of the individuals who live in mobile home parks live on very low incomes and they typically have trouble paying their rent and taking care of their property. If you are going to consider investing in a mobile home park you should also consider hiring a property management company to collect rent and manage your tenants for you. I suggest you to read more information at www.recursion.info, www.doktermuda.com, and dengarblogku blog.
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