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Why Mobile Home Parks Make Great Investments

By Medo Eldin

Republish: EasyPublish™ Published: 04Jul2009 Word count: 554 Viewed: 80 time(s) Get Free Content For Your Site

Although mobile home parks aren't the most glamorous type of real estate investment, they have some great characteristics, which make them highly profitable and highly stable investments. In today's economic environment, mobile home parks represent a safe long-tem investment alternative to many other asset classes. The following five factors contribute to favorable risk-adjusted returns associated with mobile home parks.

Benefit 1: Less Affected By Recessions

With many types of property investment, you'll find that times of economic downturn can mean a huge slow down on the return on your investment. However, no matter how the economy is performing, people will always need affording housing options like mobile homes. As a result, purchasing and maintaining a mobile home park is an investment that is virtually recession proof.

Benefit 2: High Tenant Retention

Unlike a traditional rental property, a tenant in a mobile home park can't just pack their bags and leave if they aren't happy with rent increases. Instead they'll have to actually take down their home and re-install it elsewhere. This leads to higher tenant retention and longer lease terms than you can get in other types of investment properties. As most investment property owners know, tenant retention is one of the best ways to ensure that profits stay high.

Benefit 3: Low Structural Maintenance Costs

Apartment complexes and other types property require a great deal of building maintenance, which must be undertaken. Expenditures might include things like roofing and re-painting, etc. However, with a mobile home park, the structural maintenance is typically limited to a clubhouse or laundry room and, as a result, maintenance costs are usually much lower.

Benefit 4: Favorable Supply and Demand Profile for the Asset Class

An interesting fact that many people don't realize is that there are a relatively small number of mobile home parks in the U.S. as compared to other housing types. There are numerous reasons for this limited supply, but the most prevalent is that most communities simply aren't interested in building new parks, as they'd rather have developers focus on housing that is likely to generate higher property taxes. Consequently, the supply for these parks is low and will likely only get lower as more and more parks are torn down. On the other hand, the demand for mobile home parks is on the rise, given the economic hardship increasingly experienced by many citizens.

Benefit 5: Tax Benefits

Owners of apartment complexes and similar residential income properties depreciate their property over a 27 ½ year period. On the other hand, depreciable costs associated with mobile home parks, more likely include things such as roadways, sewer and water lines, electric lines and things of that. All of these examples are considered to be land improvements for the purposes of income tax, and as such, they are depreciated over 15 years. Most investors will see an enhanced tax benefit as a result.

Conclusion

There are a limited number of mobile home parks in the United States and, as mentioned previously, supply is expected to decrease as mobile home parks are torn down to make room for tax-producing types of development. At this time, mobile home parks can still be acquired at reasonable prices. However, typically these properties don't appear on the open market, so finding the right property requires working with a seasoned professional who is familiar with the market.

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