Investing in a mobile home park is a wise idea. In recent years, demand for affordable living has increased. And as mobile homes have become more attractive and more luxurious, they’re a popular choice among people from all walks of life. Opening your own mobile home park gives you an opportunity to cash in on current trends and develop your investment to meet future demands. In this article, we’ll help you learn how to open a mobile home park and start making money.
To start your park, you’ll need to discuss your plans with the secretary of planning in the area. They can tell you which areas will be approved for a park. You will need to obtain a business license for your mobile home park as well. Or you may wish to buy an already established park that is for sale. Research the demographics and psychographics of the industry. Learn from other professionals if you want the project to be a success. As with every investment, take time to know your objective, select and research a target market, make money and reinvest the profits to keep growing.
The location of the mobile home park matters a lot and has to be convenient for the kind of community to want to have. If you want to have families, then schools and shopping areas or playgrounds will need to be close. For a retirement community, then a nice quiet place will be highly appreciated. Some of the things you must consider are:
- City zoning (very important)
- The neighborhood
- Water, utilities, and sewage
- Planned subdivision
- Restrictive covenants
As a mobile home park owner, you will only own the land and not the homes. Of course, you can buy mobile homes and put them on a lease, but then you’ll need to have the same insurance as landlords of site-built homes. If the tenants own the mobile home, then it is their responsibility to have appropriate insurance. Meanwhile, common areas, park facilities, utilities and to an extent landscaping will need to be insured by you. Talk to your insurance agent to find out what kind of insurance you’ll need based on how you run your park.
Understand the competitors
If you want to know how to open a mobile home park, then get to know your mobile home park competitors. Just because they are bigger or have been in business longer does not mean that they are better. If you can offer customers better services, you can grow your park quickly. Find out what the competition is doing; and more importantly, find out what they are not doing that residents would appreciate.
The more housing units you can accommodate in your park, the larger the profits you will be making. You should expect to meet certain challenges during the marketing campaign, but you can get a professional to handle that. You can advertise through bandit signs, newspapers, apparel, direct mail or cold calling. You should create a brand awareness plan as well so you can launch and establish yourself permanently.
Rules to follow to make money
1. Stick with affordable housing
Mobile home parks can range from high-end luxury to very basic. In all honesty, the fancy ones don’t make as much money as the simple ones. A park with a lot of bells and whistles requires more maintenance and overhead. Consequently, it’s probably better to stick with a park that offers the basics but is clean, well-maintained and a great community to live in. Keep in mind that lower-income tenants make up most of your target market. But this doesn’t mean they are undesirable renters. Families with small incomes will appreciate having an affordable place to bring up their kinds, as well as a yard for them and their pets. A mobile home is probably the only type of detached housing they can afford.
2. Understand the differences
Mobile homes are very different from other forms of real estate. Whatever you’ve learned from investing in other properties, like apartments, traditional rentals, or shopping centers, probably won’t apply. Ensure that you really understand the line items for expense and revenue, as well as what their range should be. Get to know the tax codes for your park. Mobile homes don’t qualify as real property unless they have permanent foundations, so what kinds of taxes will you be paying? You’ll also need to become familiar with the HUD codes. These are the standards that govern mobile homes. If a tenant’s home fails to comply, you need to know how to condemn the home so your park and tenants stay safe.
3. Have the right fundamentals for success
We have already talked about location, but keep in mind that just because you place your park in a metro area, it can still fail. Don’t forget to assess other important factors like the size of your park, the size of the lots, road infrastructure, competition, rent in the area, etc. It’s a good idea to place your park near amenities so residents have easy access to schools, grocery stores, shopping centers, medical facilities and restaurants.
Now that you know how to open a mobile home park …
You can get started with your own park and begin making money. Before you invest any money in opening up a mobile home park, invest your time in learning about the business. Absorb as much information as you can, hire and work with the right people, then strive to make it work.