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Updated almost 6 years ago on . Most recent reply

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David Renfro
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How to structure trailer park build?

David Renfro
Posted

I'm currently looking for my first real estate investment. I originally pursued SFH's, but I happen to own a utility construction company that installs underground utilities for commercial projects (all wet and all dry). We're also capable of performing concrete and asphalt work in-house. With that in mind, one of my real estate investor friends is strongly pushing me to build a trailer and/or RV park instead of pursuing SFH's since I have the ability to build all of the infrastructure myself.

So I’m curious as to whether anyone has any advice on the best way to structure an investment like that. I have cash to utilize, substantial equity in my personal home to take advantage of (if needed), as well as an eager banker who is willing to make any necessary loans. I assume that the best structure would be a mixture of cash and loans, but would love advice.

I need to find/purchase raw land (currently looking around 10-50 miles outside Austin City Limits), build out the infrastructure with my construction company, and ideally purchase/own all of the trailers I rent out at a monthly rate.

Questions:

1) How much of my own money should I use (20%, 50%, as much or little as possible)?

2) Do you think it’s a good idea to own the trailers, or let tenants bring in their own?

3) How does depreciation work on the trailers?

4) Should I ever waste my time with RV stalls (travel trailers), or just focus on residential trailers? I feel like trying to combine the 2 might be a headache due to managing 2 different types of customers.

5) Are there any fundamentals I should be aware of? (Land value vs trailer values, standard rental set-ups for trailer tenants, etc.)

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Rene Simon
  • Specialist
  • Lafayette, LA
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Rene Simon
  • Specialist
  • Lafayette, LA
Replied

@David Renfro Kevin Bupp did a podcast about mobile home parks. It's pretty good to get started. There are a few other guys out there who also do them. They all seem to be of the mind that building from scratch is extremely expensive and will take a long time to recover your investment. They all tend to "rehab" existing parks and hold them.

I'm like you though. I think there is a way to build from scratch, someone just needs to figure it out. I hope it's you! Because these things are the ultimate passive investment.

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