| Just about anybody who watches late night TV, or | | | | single-family homes. In many markets, there is a |
| receives email, or reads, knows that there are | | | | terrible spiral down in rents as investors effectively |
| hundreds of people promoting concepts to make | | | | bid against each other to attract tenants. |
| money in single family homes. "Buy foreclosures", | | | | Mobile home parks are in very limited supply, by |
| "profit from short sales", "wholesale houses" - there | | | | comparison. In most cities, you cannot obtain permits |
| are at least 1,000 different concepts. Unfortunately, | | | | to build mobile home parks - and you have not been |
| the only people who actually make money in many | | | | able to for decades. As a result, the supply is limited, |
| of these ideas are the promoters. There are so | | | | and there are few competitive forces to contend |
| many people chasing after single-family homes to | | | | with. |
| invest in that the market is beyond saturated, and | | | | It's another important point to note that it costs |
| any profitability has been extinguished. | | | | $3,000 to move a mobile home from point A to point |
| How about looking at something that few people are | | | | B. That's why 95% of mobile homes only move one |
| involved in and that actually generates money for the | | | | time - from factory to mobile home park - in their |
| investor - not just the promoter? That real estate | | | | entire lives. As a result, you can raise your rent level |
| niche is mobile home parks. And they have offered | | | | 5% to 10% per year and not lose a single tenant. |
| superior returns to the lucky few who understand | | | | Few tenants are willing, or able, to spend $3,000 to |
| them for several decades. | | | | move their mobile home over a $20 per month rent |
| It's all about the cap rate | | | | increase. |
| Single family homes suffer from low, or often | | | | Single-family home investors know too much |
| negative, "cap rates". A "cap rate" is the actual return | | | | Your average single-family home seller is pretty |
| on the debt and equity of the investment. A typical | | | | sophisticated. They've bought and sold several |
| single family home investment of a $100,000 house | | | | homes, and know pretty accurately what the correct |
| normally rents for $900 per month. However, before | | | | price should be. And they normally have debt on the |
| you think that it's a $900 per month return on your | | | | house. |
| $100,000 investment (which is about a 10% "cap | | | | Mobile home park sellers are typically "mom and pop" |
| rate"), remember that you have to take out | | | | owners, who are very unsophisticated. They often |
| property tax (about $200 per month), insurance of | | | | price their park for a fraction of what it's actually |
| about $100 per month, and repair and maintenance | | | | worth. And they rarely have any debt. As a result |
| of another $200 per month (I'm talking about those | | | | they can often carry the financing themselves - at |
| big-dollar repairs like roofs, etc. averaged over time, | | | | below market rates and with non-recourse. |
| too). So your net income is only $400 per month, | | | | Conclusion |
| which is a 5% cap rate. | | | | There is a lot more money in mobile home park |
| Mobile home parks make at least double that amount. | | | | investing than in single-family home investing. That |
| Good mobile home parks have a 10% cap rate or | | | | may be why there are five publicly-traded mobile |
| better. | | | | home park real estate investment trusts (also known |
| So right off the bat, mobile home parks make about | | | | as REITs) and there are zero in single-family homes. |
| 100% more per year than single-family investments. | | | | That may also explain why Sam Zell, one of the top |
| It's hard to push rents in single family homes | | | | real estate investors in the U.S., is one of the largest |
| Single-family homes are plentiful. Your local | | | | owners of mobile home parks in America - and not a |
| newspaper is bursting with homes for sale or rent. As | | | | single family home speculator. |
| a result, it is very hard to increase rents - in fact, the | | | | If making money is your goal, you should look into |
| norm these days is to decrease rents with | | | | mobile home parks, and not single family homes. |