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September 20, 2024
12 Answers for FAQs about Mobile Home Park Investing
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You’ve probably heard the buzz around mobile home park investments. So, is it really as promising as it seems? What about concerns like the stigma associated with trailer parks, securing financing, and possible maintenance challenges? We understand the skepticism and have answers to these questions—and more.
Ryan Hill and Brett Bowman of Suncrest Capital each have spent over 12 years mastering real estate and investing, and in 2020 they combined their expertise to create a successful syndicate investment opportunity for people like you. Let's get into some key questions and clear up any doubts you might have.
Ryan Hill and Brett Bowman of Suncrest Capital each have spent over 12 years mastering real estate and investing, and in 2020 they combined their expertise to create a successful syndicate investment opportunity for people like you. Let's get into some key questions and clear up any doubts you might have.
Mobile Home Park Investment FAQs:
1. Why Are Investors Buying Mobile Home Parks?
Mobile home parks are becoming increasingly hard to find as large companies acquire land to develop shopping centers and hotels, displacing both people and homes, FernGully style. This creates a supply shortage for affordable housing, which is why mobile homes are in such high demand. For investors, this means low investment and higher returns. You’re not just buying land; you’re improving it, boosting occupancy, and watching your profits grow while providing affordable homes.
2. Is Investing in a Mobile Home Park a Smart Way to Generate Passive Income?
Absolutely. Especially when you invest through a syndicate like Suncrest Capital. We handle the management, infrastructure, and systems, so your investment does the work for you. Turnover is low, only about 2-5%, compared to the 50% turnover you might see in apartment complexes. You can sit back and let the passive income roll in while spending your time on other things.
3. What Type of Asset Is a Mobile Home Park?
A mobile home park is classified as commercial real estate, just like apartment buildings, office complexes, or retail spaces.4. Are Mobile Homes Appreciating Assets?
No, but that will work in your favor. Mobile homes depreciate over time, which allows you to take advantage of tax benefits. The parks are on a 15-year depreciation schedule (compared to the 27.5 years for traditional real estate), and this lets you write off a significant part of your investment quickly. While the homes lose value, the land appreciates, and that’s where the real value comes from.5. What are the Risks of Investing in Mobile Home Parks?
There are a few key risks to be aware of:- Zoning: Regulations can change, and there’s always a chance big developers want the land for other projects.
- Old Homes and Infrastructure: Some parks need serious upgrades, which can be costly. Suncrest does thorough due diligence before buying any parks to verify the status of the infrastructure.
- Liability: You’re responsible for the park, so things like accidents or natural disasters (think tornadoes) are a concern. In a Suncrest partnership, Suncrest is the general partner and takes any liability away from investors (limited partners). We also get ample insurance to protect against the worst-case outcome and require all tenants to insure their own homes as well.
- Tenants: There’s always some risk that tenants don’t pay or don’t stay. However, Suncrest Capital’s mobile home communities are primarily filled with tenant-owned homes. When the tenants own their own homes, they’re much less likely to move them out. Tenants that own their homes take better care of their properties and stay in their homes for an average of 8 years
- Financing: Getting financing for mobile home parks can be tricky, but it’s doable.
6. How Do You Get Financing for a Mobile Home Park?
Financing isn’t as hard as it sounds, especially if you know the right people. Many local banks are open to lending for mobile home parks because they know the area’s need for affordable housing. Plus, with Suncrest Capital’s syndication model, we pool together cash and share the income with partners like you.7. Can You Make Money Investing in Mobile Homes?
Yes, but the real money comes from owning the park itself, not just the homes. Mobile homes depreciate, but the land appreciates. Improve the infrastructure—think sewer systems, electricity meters, and common areas—and you can charge higher rents, increase the park’s value, and boost your profits.8. Do Trailer Parks Make Money?
Absolutely, if you plan well. At Suncrest Capital, we target parks with at least 68% occupancy in the first year and aim to reach 100% by year five. This increase in occupancy boosts profitability and provides a reliable return on your investment. We also offer an 8% preferred return and typically aim for an average 10-year hold period, ensuring a long-term commitment to preserving and growing your investment.9. How Does the Trailer Park Stigma Affect Mobile Home Investments?
Actually, the stigma works in our favor. The perception keeps costs low, which means higher upside potential for investors. Picture this: for the same price as apartment living, you could offer people a home with a yard, a parking space, and a sense of ownership. The stigma is fading as we improve parks with better infrastructure, background checks for safety, and attractive amenities.10. How Are Mobile Home Parks Recession-Resistant?
A key advantage of mobile home park investing is its resilience in times of economic downturn. When the economy hits a rough patch, people still need affordable housing, and mobile homes provide just that. Historically, occupancy rates in mobile home parks remain steady or even increase during recessions as more people seek out cost-effective living options. This makes mobile home parks one of the most stable real estate assets to own during uncertain financial times, giving you the peace of mind that your investment can weather market fluctuations.11. Why Use Real Estate Syndication in Mobile Home Park Investments?
Syndication allows multiple investors to pool their resources together, providing the opportunity to own a share of a large, income-generating property that would otherwise be out of reach for many individuals. It also spreads the risk across multiple investors, making it a safer and more accessible way to enter the commercial real estate space. For investors, this means enjoying the benefits of owning commercial real estate while relying on experienced operators to manage the day-to-day complexities.12. Are Mobile Homes a Good Investment in 2024?
Mobile home communities are still a great investment as we close out 2024. Demand is high, they’re recession-resistant, there are tax benefits, and you can force appreciation by upgrading infrastructure. With more investors coming into the space, Suncrest Capital continues to offer a low-risk, high-reward opportunity.Bonus: How to Get Started with Mobile Home Park Investments?
At Suncrest Capital, we’re always looking to grow. We went from 4 communities in 2020 to 26 in 2024 , and syndication is helping us expand even more. Want to join? Check out our investor portal or contact us at investors@suncrestcap.com. Let’s see how much we can achieve together!
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