Real Estate Investment Niche: Mobile Home Park
Surprisingly interesting
I listen to a few financial advice podcasts, and one that I like is called Planet Money. The show yesterday was about mobile home parks as a real estate investment. I don’t have to tell you how boring this show title sounded. I expected it be like watching grass grow. However this turned out to be about how people living in mobile home parks are losing their homes, and how investors can actually do something to help them and still make money. I realized that the affordable housing crisis in my country, and possibly yours is real. I also realized that the solution group ownership is a universal solution. So I will share with you my spontaneous review of the Podcast important points. They highlight one of my parents favorite sayings: Every problem is an opportunity waiting for the person with vision and action.
The Review Planet Money Podcast: Mobile Parked August 6th, 2021
Problem:
People in mobile homes may or may not own their mobile homes, but don’t own the land.
Issue:
Many mobile home parks are owned by older people who are retiring and selling their mobile homes. Investors are buying up these mobile home parks. They are able to get low interest rate loans from Fanniemae and Freddiemac two federal housing corporations created to help people own their own homes.
Opportunity:
investors find the majority of mobile homes are inefficiently run, and it is possible to buy them and turn a profit by improving rent collections, and fix water, sewer or electrical hookups which waste money. These improvements increase profitability.
####,Additionally;
improving collections and profitability increase the value of these properties. This increased value allows refinancing the initial loans to take out more money from the properties. These chunks of money are loans, so not taxable income. This can be reinvested into the property or can be used to invest in additional mobile home park purchases.
Scaleability:
Each one can provide the extra cash to buy another, while each is still profitable. Investors buy a mobile home park, increase profitability and thus paper value, refinance to take out cash, then use the cash to but another mobile home park, then increase its profitability, it’s paper value, refinance to take cash out, use the cash to buy another mobile home park.
Mobile Homes meet and endless demand.
The USA has a housing crisis due to not enough affordable rental houses. The minimum wage has nit increased overtime to keep up with inflation, so millions of Americans are priced out of the homeownership market. But Mobile Homes are very affordable, and the mortgage payments are within the wages of minimum wage earners. Plus the rental market have the lowest inventory in a decade. So minimum wage earners are also priced out of the rental market. Mobile Homes are cheaper to rent then an average size single family home. Mobile Homes are also cheap to rent. Limited Supply meet unending demand. can be applied beyond mobile homes. Renters are finding shrinking available rental market coupled with rising house prices and increased competition for the homes which are for sale. Mobile homes fix all these issues.
Some people run towards problems.
Every problem has a set of possible solutions. The Mobile Home Park has become the prize for large corporations to buy and invest in…
I am not a large corporation with great resources to find the best investments. But I can read and watch what the rich people invest in, and if it makes sense in my eyes, I can copy the rich.
Follow the money, honey.
