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Buying Land For Mobile Home Park [TOP]

People ask us all the time why, since we're one of the largest mobile home park owners in the U.S. and are extremely bullish on the industry, we don't build new ones. They'll call us with raw land that they want to sell us to build a new park on. The truth is that we would never build a new park from scratch. We don't recommend that anyone does. But now let us explain why that is not hypocritical.

buying land for mobile home park

Virtually every city in the U.S. no longer allows new mobile home park construction. As a result, you'll have to build a new park way out in the county, where nobody can block your project. This location will be so remote that nobody will even know you exist unless you spend a fortune on advertising. And the few that drive out to look will be appalled by the commute time and lack of nearby services, like a grocery or liquor store. All the good mobile home park locations were taken 30 years ago. There's nothing new that's worthwhile.

If you thought the private water and sewer was expensive, wait until you see the price tag on filling the park with mobile homes. Wait, you say, I'm in the park business, not the home business. Here's the reality: you cannot fill a mobile home lot today unless you buy the home and bring it in yourself. It will cost you around $25,000 to fill a lot, assuming a mix of new and repo homes. So the price tag to fill a 100 space community is around $2.5 million. And nobody's going to finance that. Does that sound attractive?

And financing homes is not even your biggest banking hurdle. Getting a loan to build the park in the first place is just as impossible. Nobody wants to make construction loans these days. Why should they - they're chock full of unnecessary risk. If you can find a banker today that will finance your construction of a new mobile home park, then you are the LeBron James of bank dog and pony shows.

If you build a new mobile home park, you will embark on an odyssey of risk like no other. Since banks won't make loans on parks that are not "stabilized" (80%+ occupancy), you will be on your own until you hit that number. You can't get out with the project at 30% -- even if you want to. It's like no-man's land in World War I: if you can't make it to the next trench at 80% occupancy, you're going to get annihilated.

But perhaps the most important reason that you will not want to build a new mobile home park is that you can't make any money with it. It's that simple. When you take into account the interest carry of filling up a mobile home park from scratch, the return on the project is zero or negative. Even the greatest new park in America would be lucky to hit a 5% return. With hundreds of mobile home parks available - already built and at stabilized occupancy - at 10% going-in rates of return, why would you even consider building one?

Building a new mobile home park is just a bad idea. Buying an existing mobile home park is a great idea. The affordable housing industry is a great business model, But the real estate construction business model is not. Stick with existing parks. They are easier, lower risk and - most importantly - infinitely more profitable.

In general, a mobile home park owner simply rents out small pieces of land to others. Investors can purchase the entire mobile home park and lease each pad to residents that either rent or own a mobile home.

But despite their returns, only about 20% of mobile home parks in the country are professionally owned, leaving the remainder of the market up for grabs by investors looking to begin or diversify their investment portfolio.

The owner of the mobile home is responsible for maintenance, updates, and repairs to their residence, not the landlord. While the mobile home park owner must account for the upkeep of the park, it is significantly less than upkeep in an apartment building.

However, mobile home parks have low turnover because it costs the tenant thousands to move their home out of the park. Most mobile home park owners plan to stay for at least 5 years. This means that turnover is low, and there is little risk.

More and more people are choosing to live a minimalist life, shifting from big houses to tiny homes and travel trailers. If you've ever thought about buying land for a mobile home park, now is the time to do it. The housing crisis and the popularity of minimalist living are fueling this market, offering new business opportunities. A mobile home park can be a good investment, but there are some things you should know about it before taking the plunge.

The U.S. is home to more than 45,600 mobile home and RV parks, according to the Mobile Home Park Home Owners Allegiance. Florida alone is home to more than 5,500 parks. The Financial Times reports that about 22 million Americans are living in mobile homes. This trend is largely due to rising housing prices.

The average wage earner simply cannot afford a median-priced property. Even those who rent may spend more than one-third of their income on housing. Considering these facts, it's not surprising that mobile homes are growing in popularity. Their residents can either purchase or lease the lot and often end up paying significantly less than what they would have paid for a single-family house.

Also known as manufactured home parks, mobile home parks are subject to state and local laws. The City of Sequim in Washington, for example, defines a mobiles home park as the location for at least two manufactured homes that are occupied as dwellings. Mobile home parks in Hallandale Beach (Florida) must have three or more manufactured houses with parking spaces that can be maintained for rent or without rent.

Furthermore, mobile homes are required to meet the certification requirements imposed by the Federal Housing Administration. These structures are regulated by the U.S. Department of Housing and Urban Development. As far as mobile home parks go, they can range in size from two to 1,000 housing units and up, depending on the state. Some offer permanent accommodation, while others are designed for travelers or retirees.

Forbes notes that most park owners only purchase the land, not the housing units. A lot is significantly cheaper than a traditional home or apartment building, meaning that you can buy more units for less money. Additionally, you won't have to deal with home repair and maintenance. These tasks fall under the responsibility of mobile home owners. Your only job is to keep the park in good condition and provide basic utilities as required by law.

This business model also carries a lower risk than other real estate investments due to the low cost per unit. Tenant turnover is lower, too. According to Forbes, tenants can expect to pay $5,000 and up to move their homes out of a park. Therefore, they tend to stay longer in the same place compared to those renting an apartment or house.

Before getting started, make a business plan and determine how you want to proceed. Decide on a location for your mobile home park and then research the local market. See what your competitors are offering and try to fill a gap in the market. For example, you could build a mobile home park that appeals to millennials who choose to live a minimalist life. Another option is to create a thriving community for retirees.

Take into account the size of your park, as well as its facilities and selling points. With these things in mind, draft a mobile home park layout and assess the costs involved. Determine whether you want to purchase an existing park and then customize it according to your needs or build one from scratch.

If you choose the first option, check out the Mobile Home Park Store, BizBuySell, MHVillage and other online marketplaces to find mobile home parks for sale. You may also check public records to see what's available in your area. Also, determine whether you want to only buy the land or provide housing as well. With the second option, your tenants will rent both the land and the house on it.

A mobile home park business plan should also cover your short- and long-term goals, financing options, target market, financial forecasts and marketing strategy. Think about the legal aspects, too. Depending on the state, you may need to conduct a feasibility study and obtain professional designations, such as Counselor of Real Estate (CRE) or Certified Property Manager (CPM).

Also, research the legal documents needed to start this type of business, including mortgage deeds, property agreements, zoning permits, licenses and more. These requirements vary from one state to the next. The State of Vermont, for example, requires business owners to register their mobile parks with the Department of Housing and Community Development and pay $12 per occupied leased lot annually.

If you're planning to build a mobile home park in Michigan, Minnesota or other states, you must first obtain a license, permits and relevant certifications or approvals. Discuss your options with a lawyer to make sure you're legally compliant.

Mobile homes are vulnerable to floods, hurricanes and natural disasters, notes the University of Colorado, Boulder. That's something you must take into account before buying land for a trailer park. Ask your county development office if the property is in a floodplain. You also need to check the zoning restrictions (if any) and determine whether or not you may install mobile homes on that property.

Aim for at least three to five acres, depending on how many lots and common spaces you need. Choose a piece of land with your target audience in mind. For example, if you're targeting millennials, it's wise to choose a piece of land that's not too far from the city. Young people have jobs and may not be willing to travel miles to work every day. But if you're building a mobile home park for retires or digital nomads, you may opt for a more secluded location.

All in all, it's easier to purchase an existing mobile home park. If that's not an option, consult an attorney and an architect with experience in this niche. Determine the placement of each housing unit, the driveways, streets and other amenities. Securing funding is just as difficult, so be prepared to reach out to investors, banks and private lenders. Consider starting out by installing utilities for three or four mobile homes and expand later on. 041b061a72

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