Top 3 Ways to Get Started with Passive Mobile Home Park Investing

Introduction

Mobile home parks are one of the most profitable and resilient niches in the real estate industry. They offer affordable housing to millions of Americans, and they have low operating costs, high occupancy rates, and strong cash flow. However, investing in mobile home parks can also be challenging, as they require specialized knowledge, management, and financing. If you are interested in passive mobile home park investing, but you don’t want to deal with the hassle of owning and operating a park yourself, here are three ways you can do it:

1. Investing in a Mobile Home Park REIT

A real estate investment trust (REIT) is a company that owns and operates a portfolio of income-producing properties, such as mobile home parks. REITs are publicly traded on the stock market, and they are required by law to distribute at least 90% of their earnings to shareholders as dividends. By investing in a mobile home park REIT, you can own a share of a diversified portfolio of mobile home parks without having to buy or manage them yourself.

Investing in a mobile home park REIT is the easiest and most accessible way to invest in mobile home parks passively. You can buy and sell REIT shares on the stock market, just like any other stock. You can also benefit from the appreciation of the property value, the tax advantages of owning real estate, and the steady dividend income.

Mobile home park investing REIT also has some drawbacks. The returns (ROI) can generally be the lowest of the three options, because of the SEC regulations and the stabilized institutional quality mobile home park assets they are buying that should provide less risk. You also have to pay taxes on the dividends and capital gains, which may reduce your net return. You also have to deal with the volatility and unpredictability of the stock market, which may affect the value and performance of your REIT shares.

2. Buying a Mobile Home Park Yourself and Having a Property Management Company Fully Run the Day to Day Operations

Another way to invest in mobile home parks passively is to buy a park yourself and hire a property management company to handle the day to day operations. This way, you can have more control and ownership over your investment, and you can choose the park that suits your criteria and goals. You can also benefit from the appreciation of the property value, the tax advantages of owning real estate, and the cash flow from the rent.

Buying a mobile home park yourself and having a property management company fully run the day to day operations also has some challenges. Finding a good third party property manager that understands the intricacies that the mobile home park asset class requires is very rare, and once a mobile home park asset goes south, it’s really hard and expensive to turn it back around. You also have to deal with the financing, due diligence, and closing of the park, which can be complex and time-consuming. You also have to pay the property management fees, which may reduce your cash flow and return.

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By Andrew Keel

3. Passive Investing as an LP into Private Mobile Home Park Syndications or Investment Funds

A third way to invest in mobile home parks passively is to invest as a limited partner (LP) into private mobile home park syndications or investment funds. A syndication is a group of investors who pool their money together to buy a large property, such as a mobile home park, that they could not afford individually. The syndicator, or the general partner (GP), is the one who finds, acquires, and manages the property, while the limited partners (LPs) are the passive investors who provide the capital and receive a share of the profits. An investment fund is similar, but instead of investing in one property, it invests in a portfolio of properties.

Passive investing as an LP into private mobile home park syndications or investment funds potentially offers the best of both worlds. You can invest with active mobile home park operators who are experts in the space and have a proven track record that you can review. They also offer equity to the limited partners with tax benefits and the potential for higher returns. You can also benefit from the appreciation of the property value, the tax advantages of owning real estate, and the cash flow from the rent.

However, passive investing as an LP into private mobile home park syndications or investment funds also has some risks. You have to trust the GP or the fund manager to execute the business plan and deliver the returns, and you have to be comfortable with the lack of liquidity and control over your investment. Furthermore, you have to do your due diligence on the GP or the fund manager, the property or the portfolio, and the market before investing. You also have to meet the minimum investment amount, which can be higher than the other options.

Conclusion to Getting Started with Passive Mobile Home Park Investing

There are many options when it comes to passive mobile home park investing. Whether you choose to invest in a mobile home park REIT, buy a park yourself and hire a property manager, or invest as an LP into a syndication or a fund, you can enjoy the benefits of owning mobile home parks without being actively involved in the management. However, with whatever path you choose, it’s important to do your due diligence on the operator and the property to ensure they have a proven track record in the business model they choose in order to be successful. You also have to ask the right questions of yourself to align your investing goals with your risk tolerance and liquidity needs.

At Keel Team Mobile Home Park Investments, we’re dedicated to enhancing communities while potentially maximizing investor returns. Our focus is on improving residents’ lives while delivering strong profits to our partners. Get in touch using the contact details below to learn more about our investment approach and strategy.

Disclaimer:

The information provided is for informational purposes only and should not be considered investment advice, nor a guarantee of any kind. There are no guarantees of profitability, and all investment decisions should be made based on individual research and consultation with registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations.