5 key Metrics prove exactly why Mobile Home Parks are vastly superior to practically every other asset class. I’m Eloy Retana. I’ll tell you what they are right now in Episode #2 of The Savvy Mobile Home PARK Investor Show.
You know what they say about land: There’ not making more of it. But investing in the real estate is a labyrinth: there are so many choices and many things that appear to be investment opportunities turn out to be mine fields just waiting for the next sucker to walk by.
But there are some wise, objective standards that a savvy investor can use to make great decisions. Let’s see how Mobile Home Parks compare on some of these finer points, shall we?
So, key metric #1 is:
Low Tenant Turnover
A major expense for single family rentals and apartment owners is tenant turnover. When there’s turnover in a single-family rental, you have 100% income loss for that period. A apartment turnover rates tends to be similarly terrifying, at the rate of 20%- 30% per year.
How do Mobile Home parks compare? Well, how does ZERO percent turnover sound as an alternative? You heard that correctly. It isn’t uncommon for mobile home parks to go an entire year or more without ANY TURNOVER at all, and very little in normal years. Why? Many tenants live in parks by choice because it provides them affordable home ownership option. They do not have to pay property taxes, they feel at home in a park community that provides a level of privacy that they couldn’t find in an apartment. Not to mention, in our parks, the tenant own’s his Mobile Home and the cost to move that mobile home to another park simply doesn’t make sense so they have an incentive to stay… and they do. Which leads us to Key Metric #2…
Tenants Responsible for Repairs and Maintenance
I’ll be honest, I hate dealing with contractors. with Single family rentals and apartments, dealing with contractors can be a regular occurrence, not so with Mobile home Parks. Why is that?
Well, as I mentioned before, as Park owners, we own the LAND, but we dont own the Mobile homes, the tenants do, therefore the responsibility of the expenses and repairs falls squarely on the tenant. This includes the utilities. tenants tend to abuse of the water when they’re not paying for it, my sub-metering, and billing the utilities back to the tenants, a funny things happens, people stop wasting water.
Its a beautiful thing when you as an owner are only having to account for the expenses of the upkeep of the park.
And another place where real cost savings happen for me and you as investors is in Key Metric #3, which is..
Cost per unit
When you purchase a single- or multi-family rental property, you are purchasing a combination of land and a physical asset that you can rent out. When you purchase a mobile home park, you are purchasing ONLY land that you can rent to a tenant who can then put their physical asset, the mobile home, on that land. Since you are paying for an existing building when you purchase a single- or multi-family rental property, the cost per unit is much, much higher than the cost per unit when you’re investing wisely in Mobile Home Parks
For example, if you purchase a six-unit building for $1M, the cost per unit would be about $167,000. Say you pay $1 million dollars for a mobile home park and get 40 available lots to lease out, your cost per unit would be $25,000…… but your NET PROFIT per unit is going to be similar or even BETTER with MORE UNITS when investing in Mobile Home Parks versus rental properties. It’s just a much, much smarter way to use your investment capital
And speaking of getting MORE for your money, Key Metric #4 is simply amazing because it saves you SO MUCH capital. Key Metric #4 is
Your TENANT buys and owns their mobile home… NOT YOU
It may sound wonderful to be able to rent 30 homes out for $1500/month (hypothetically of course) but now you have 30 roofs, 30 water heaters, 30 A/C units, etc to maintain. This is the type of headache a park owners are trying to avoid. When we buy a new park with park owned mobile home, the very first thing we do is to sell that Mobile home back to the tenant.
For us as owners, this means less maintenance, less expenses, LESS headaches, and more profit! Which leads clearly to Key Metric #5, which is that
REASON #5 CAP RATE #5
CAP RATE. Now in case you’re not aware, Cap Rate means capitalization rate, and though it’s SLIGHTLY more complicated than this, you can basically think of cap rate as return on investment from cash flow. Cap rates are helpful because they let us objectively compare the cash flow among distinct asset classes. And that’s really helpful for me and you because here’s what we know: The typical cap rates generated by Mobile Home Parks absolutely CRUSH those generated by practically all multi-family and single-family investment properties. I mean, it’s really not even close.
Bottom line: If what you’re looking for is cash flow – and we all know that cash flow is king – then an objective look at cap rates makes it INCREDIBLY clear that Mobile Home Parks are worth a serious look.
Folks, that’s all I’ve got for you today, except for this: The most common question I get is this: Eloy, I’d love to get involved… can you connect me with some of these great mobile home park investments that you’re describing? And the answer is: Maybe! Most of our projects fill rather quickly, and all of them require a minimum of $50,000 to participate, so if YOU would like to be notified whenever we have exceptional opportunities just open up that web browser go to www.partnerwithapex.com that’s PARTNERWITHAPEX A-P-E-X.com to get on our our VIP investor list right now and I’ll reach out to you when the next great opportunity comes along. Until next time, I’m Eloy Retana REMINDING YOU That “The goal isn’t more money. The goal is, life on your terms”