You can make huge returns on mobile home parks if you take the time to learn how. Mobile home parks offer some unusual advantages over other forms of rental properties and your return gets better with longevity.
A benefit of investing in a mobile home park is continuous supply and demand, and they have one of the highest yields of any type of real estate.
There are approximately 50,000 mobile home parks in the U.S, and even though the supply of parks available to purchase is limited and there are still opportunities to get into the business. The permit value of your park today will actually gain value over time, as there can be no competition built near you in the future. There is no other type of income property with this advantage.
Also consider that the mobile home park business is the low tenant turnover. In a mobile home park, the tenant has a barrier to leaving of about $3,000 the cost of taking down, moving and re-installing the home; the tenant often has no negotiating room and must put up with rent increases when they occur. No other business has the blatant restraint of trade that the park business does.
Not having structures to maintain in a mobile home park is another benefit. You don’t have to make constant capital expenditures such as roofs and painting. In a typical park, the only structures are laundry rooms and clubhouses; many parks have neither. Keep in mind that older mobile home parks will require more maintenance expenses than newer ones.
Another benefit of mobile home parks is in income tax depreciation laws. Apartments and other structure-intensive commercial real estate are generally depreciated during a period of 27.5 years. For mobile home parks, the depreciable costs are typically in the roads, water lines, sewer lines, electric poles and so on. These are considered land improvements for income tax purposes and are depreciated during a period of 15 years. This increased depreciation over the first 15 years can be a major tax benefit for investors.
At Asset Exchange Strategies, LLC we have had conversations with potential self-directed IRA clients many thousands of times and the myths continue to live on after 20 years in the business. Some things like Sasquatch or area 51 seem to perpetuate in people’s minds without any substantial evidence the concept is correct or myth. Let’s […]
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