Mobile home park investing

[Michael K. Smith]

Just heard about mobile home park’s and the very low risk/ High reward it offers. Just wondering if any mobile home park investors out there can share there knowledge on this form of investing ? Thanks in advance!

[Frank Rolfe]

I have owned and operate mobile home parks for nearly 30 years and I have learned the following positive traits to this sector:

1) Huge demand for affordable housing in the U.S. (if you are in the right market).

2) The ability to buy cheap from moms and pops with huge room for upside in rent increases and occupancy increases.

3) The ability to obtain seller financing (which is what got me into the business to begin with).

4) The huge underlying value in being in an industry that has not allowed new construction since the 1970s.

5) The low management intensity when you are just renting land.

6) The only remaining sector of real estate in the U.S. where you can hit 20%+ cash-on-cash returns if you are smart.

7) The win/win business model of bringing old mobile home parks back to life.

8) The beauty of being in a business sector that is on the right side of every American megatrend.

But there are also the following drawbacks:

1) Suffering through a huge negative stigma that makes you embarrassed to even tell people what you do sometimes.

2) Suffering through some city halls that hate mobile home parks and everyone associated with them.

3) Suffering through media that assumes that anyone who owns a mobile home park is therefore evil no matter what you do.

4) High levels of risk (and almost certain failure) if you do not conduct good due diligence.

5) The endless risk of private utilities unless properly vetted.

6) Learning to adapt to the customer base and being a good landlord that gets the job done in a friendly way.

7) Not getting involved in the hysteria of some markets that offer little in the areas of returns or safety.

I cannot emphasize enough that this is not a get rich quick scheme, but a get rich slow scheme. Every smart owner has done incredibly well, but there are plenty more that crash and burn because they went too fast and did not bother to learn the industry or be patient for the right deal. You cannot just buy any old mobile home park and succeed -- but you can buy the right park with the right attributes and, managed correctly, retire on just one property. I'm not sure if there is any other sector of real estate out there today that you can realistically say that about.