In recent years, a growing trend among real estate professionals is the shift towards passive investments, with a keen interest in mobile home parks. This movement is not without reason; the potential benefits of passive mobile home park investing in syndications and funds within this asset class generally offer a compelling argument for real estate agents looking to likely diversify their investment portfolios. Let’s explore why real estate agents are specifically targeting these investments and what typically makes them so attractive.

Potentially Attractive Returns for Investors

One of the most enticing aspects of mobile home park investing lies in its potential for high rates of return. Mobile home parks often boast higher cap rates, about 3% higher on average compared to other multifamily investments, leading to potentially higher returns for investors. For instance, it’s reported by the Wall Street Journal that Sun Communities has rewarded its investors with returns of 4100% since the housing crash, dwarfing the S&P 500’s 10% return in the same timeframe. This stark difference highlights the unique financial allure of mobile home parks, especially for real estate agents looking for a potentially passive income stream.

The Value Proposition of Shrinking Supply

Another major factor drawing real estate agents to mobile home parks is the value proposition typically offered by the asset class’s shrinking supply. With an estimated 44,000 mobile home parks across the USA and a concerning trend of closures, the supply of these communities is dwindling. This scarcity, coupled with the near impossibility of securing approvals for the development of new mobile home parks, creates a compelling investment narrative rooted in Econ 101 of supply and demand.

Historically Strong and Persistent Demand

The demand for affordable housing in America underscores the importance of mobile home parks. The affordable housing crisis, characterized by a shortfall of over 7 million affordable homes, positions mobile home parks as a critical solution. This demand is amplified by the fact that a significant portion of Americans earn less than $30,000 annually, with many unable to afford conventional housing options. Mobile home parks not only offer a feasible alternative but also represent a growing sector that generally requires minimal marketing due to its historical demand.

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By Andrew Keel

Likely Benefits of Low Tenant Turnover and Maintenance Expenses

Mobile home parks typically experience low tenant turnover, around 5%, which is significantly lower than apartment complexes. The cost and logistical challenges associated with moving mobile homes ($5000+) contribute to this stability, which in turn, translates into reduced expenses for owners. Moreover, since mobile home park owners usually only own the lots and not the mobile homes, repair and maintenance expenses are typically lower, likely enhancing the profitability of these investments.

Leveraging Syndications and Funds for Passive Investment

Syndications and funds offer a streamlined path to investing in mobile home parks without the need for direct management involvement. For real estate agents, this approach aligns with a desire for passive investment strategies. By pooling resources with other investors, agents can participate in opportunities that might be beyond their reach individually, while potentially benefiting from professional management teams that handle the day-to-day operations on their behalf.

Conclusion

The trend of real estate agents seeking avenues in passive mobile home park investing underscores a broader recognition of the potential benefits these assets can offer. From historically high returns to shrinking supply, mobile home parks present a compelling investment case for busy real estate professionals seeking the potential of passive income. As the real estate landscape continues to evolve, the role of mobile home parks in investment portfolios, particularly through passive channels like syndications and funds, is likely to grow, offering both seasoned agents and newcomers alike a historically attractive avenue for likely growth and stability.

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.