The number 1 rule for any successful real estate investor in the US market is to keep up with recent US real estate trends. Real estate investing is a highly fluid endeavor which is constantly subjected to new trends and opportunities. If you want to be a successful real estate investor in the 21st century, you should learn about and think about the option of investing in mobile homes and mobile home parks as one of the hottest US real estate trends.
What are mobile homes and mobile home parks?
To be honest, when we talk about real estate investing, mobile homes and mobile home parks are not the first thing which comes to mind. That’s why it is important to define them and explain what they are before discussing how to invest in them:
- Mobile homes: A mobile home, built in the US since the 1970s, is a form of housing comprised of a prefabricated structure, built on a permanently attached chassis, which then gets transported to a site. A mobile home can be located in a certain place permanently or semi-permanently or can also be moved around, hence the name. While mobile homes might have many disadvantages compared to regular homes, their biggest benefit is that they are very cheap. And that’s what has secured them their status as one of the top US real estate trends. Mobile homes can be used as a permanent home, as a vacation home, or as a rental property. Buying and managing a mobile home as an income property has many pros and cons, which will be discussed in a bit.
- Mobile home parks: A mobile home park, on the other hand, is a permanent or semi-permanent area for mobile homes. They offer excellent opportunities for less wealthy individuals and households and for people who move a lot.
Why are mobile homes and mobile home parks among the hottest US real estate trends?
Despite some negative perceptions, mobile homes and mobile home parks have gained significant popularity in the US in the past decade to emerge as one of the leading US real estate trends. This holds true both in terms of housing and real estate investing. But why would so many people across the US prefer to live in a prefabricated, not permanently attached home or rental property? The answer is simple – affordability. Mobile homes cost only a fraction of the price of typical homes, which is a huge plus in a society where many individuals are forced to live on $20,000 or less per year. Because of being unable to buy a home, an unprecedented proportion of the US population now lives in rental properties, with rents averaging above $1,000 a month. In such a market, tenants will naturally be drawn to investment properties rented for $500 or less, as is the case with mobile homes. Thus, it is no surprise that mobile homes and entire mobile home parks have emerged as one of the most popular US real estate trends.
What are the pros of mobile homes and mobile home parks as a real estate investing option?
As one of the hottest US real estate trends, mobile homes and mobile home parks have many advantages over other, more traditional forms of real estate investments. Let’s look at the most important ones of them:
- Affordability: Just as mobile homes are affordable for home owners and for tenants, they are very affordable for real estate investors too. This is a huge benefit for first-time investors and others running on a low budget.
- Low maintenance cost: Mobile homes are generally small and simple, which makes them easy and cheap to maintain. You will not have to worry about fixing the fence or cleaning the swimming pool or anything else like this when you have a mobile home as an investment property.
- No need for professional property management: Since mobile homes are easy to maintain and manage and because in most cases they are close to your primary home, you don’t have to hire a professional property manager to take care of your income property. You can do all the work associated with owning and renting a mobile home on your own. Thus, being a landlord is cheap and easy in this case.
Related: Professional Property Management: Pros and Cons
- Return on investment: Because of the low investment property price and the low maintenance costs, mobile homes might end up generating very good return on investment, in terms of both CoC return and cap rate. That’s probably the main reason why you should think about one of the hottest US real estate trends.
- New segment of tenants: If you become the landlord of a mobile home, you will be able to attract a new segment of tenants – namely lower income individuals and households who cannot pay for a standard rental property.
- Investment diversification: Every real estate investor should look for opportunities to diversify his/her real estate investment portfolio, and mobile homes offer an excellent option to do that. First, they are a very different kind of investment from your typical rental property; and second, you can buy many of them.
- Easy to grow: It is much easier to grow as a mobile home real estate investor than as someone who invests in traditional single-family homes or condos. Mobile homes are so cheap that you can often pay for a second one with the rental income from the first one without much effort. Soon you can be the owner of an entire mobile home park.
- No need for partnerships: Although networking is crucially important in real estate investing and partnerships offer opportunities you would not have as a sole investor, when it comes to mobile homes real estate investing, you don’t have to have a partner to start and grow. If you prefer to work on your own, that’s an excellent option.
Related: What You Need to Know about Real Estate Partnerships
- Can move with you: If your full-time job requires you to relocate frequently, mobile homes will give you the option to take your investment property with you. No wonder investing in mobile homes is among the top US real estate trends.
- Available loans: Though you might not need a loan to buy a mobile home, mortgages are still available for this type of investment.
- Traditional and Airbnb: Mobile homes give you freedom as a real estate investor as they can be rented out traditional or Airbnb, depending on the exact location.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
What are the cons of mobile homes and mobile home parks as a real estate investing option?
Needless to say, although among the hot US real estate trends, mobile homes and mobile home parks are not a perfect form of real estate investing, they do have their flaws:
- Not much cash flow: If you are looking for a huge monthly check (rental income), mobile homes are not the right kind of investment for you. However, remember that in real estate investing it is important to have positive cash flow which is easy to secure with mobile homes.
- Low appreciation: If you go for appreciation as a real estate investor, mobile homes are not for you. Their prices do not increase significantly over time.
- Bad tenants: Experience shows that lower income tenants are more likely to be bad tenants (delaying monthly payments, causing damage, etc.), and this is exactly the kind of tenants you would have for a mobile home rental property.
Related: How to Deal with Bad Income Property Tenants
- Less available loans: Generally fewer loan (mortgage) options are available for people looking for buy a mobile home, mostly because they are seen as riskier due to their lower income. This is not so much the case with investors, so you should not dismiss one of the most popular US real estate trends for that reason.
- Not for conservative real estate investors: Despite their numerous advantages, mobile homes are definitely not the right type of investment for conservative real estate investors and landlords. They require a different kind of thinking. Moreover, they might attract some ridicule from other, conservative investors.
When you start considering your next investment property purchase, don’t limit yourself to traditional types of homes only. Think about mobile homes and mobile home parks as one of the hot US real estate trends.