Mobile home parks offer extremely low maintenance for investors. This factor alone provides a superior advantage for delivering on more of what today’s property investors really want.
The Apex of Operational Profitability
It is common knowledge that many more experienced investors trend toward investing in apartment buildings for their lower cost per door, higher ROI on value add improvements, and lower property management burden per unit.
This infographic shows that at least three other property types boast even lower maintenance costs than multifamily property. There is student housing and self-storage. Then taking the gold for lowest maintenance cost is manufactured housing.
The manufactured housing we see in mobile home parks also offer an average cost per door of just one third of apartments, and when measured in number of doors the same capital can afford mobile home parks are way in the lead when it comes to ROI on improvements.
Why is this Metric so Important?
- The lower the maintenance costs, the less of a burden when repairs come up
- Lower maintenance needs, mean less intensive property management
- Lower maintenance expenses leave more profit margin
This translates to needing less capital reserves sitting idle, less manpower on staff to handle maintenance, and higher returns in terms of both cap rates and cash on cash.
Why Mobile Home Parks have such Low Maintenance Costs
Manufactured homes themselves seem to be notably less complicated than sit built structures, but what really turns the books in favor of mobile home park investors is the fact that the owner’s maintenance is really limited to the land.
In a single family home or condo rental you will notoriously have more insurances to juggle, more minor working parts to keep working and up to code, and when big things go wrong they can get insanely expensive. Try replacing a faulty glass enclosed shower with mosaic floor on the second floor; it could easily run you $10,000. Then there are monumental expenses like roofs, pool pumps, and foundations. And pesky minor ones which can cost a lot in labor; running the gamut from clogged plumbing to faulty outlets, and even burned out light bulbs and tenants who lock themselves out of their units.
Mobile home park investors normally simply rent the lot. The housing unit is typically 100% the responsibility of the tenant. Utilities may be public or private. In some cases park owners may find themselves with units left behind which they can rent. The higher rents from these units should offset any additional maintenance. The bottom line is that you are usually only renting a rectangle of land versus a habitable building.
The Benefits of a Low Maintenance Burden
In addition to the above investors will find at least 3 very valuable benefits of low maintenance properties…
Low maintenance investments mean income is more passive. Nothing is less passive than owning and self-managing a portfolio of single family homes. A mobile home park with a good manager, and few emergencies that require you to step in will allow you to both enjoy the lifestyle you crave, and have the income fuel you need to live it.
One of the biggest threats to single family home investments and even REITs is big unexpected expenses and maintenance crises. Lower maintenance requirements and costs reduce the risk of these items and in turn – more consistent and predictable returns.
Ease of Succession
Many investors are not just investing for themselves, they are building a legacy. They want to provide an income producing legacy for their spouses or next generation. High maintenance investments can be a nightmare for heirs. Or they may simply need to be liquidated before the estate is transferred. Mobile home parks can be much easier to pass on, and for heirs to enjoy the rewards of.
Maintenance is a significant part of the equation when evaluating investment opportunities. Beyond the income and ROI digits, maintenance burden can also impact how well investments deliver on income needs, lifestyle goals, and succession plans. The data shows that mobile home park investments boast the lowest maintenance costs for investors seeking the best overall opportunities in the real estate market.