We’re back to take a deeper look at reasons why your dollar should be in the MHP industry. We’ll examine how MHP Investment Opportunities stack up against apartments. The short answer, the mobile home park industry gives you more value for your buck!
We’re already seeing mobile homes renting for what an apartment would be. That’s because they’re newer and provide the opportunity for eventual ownership. This is especially in the case of an RTO note. If an apartment costs $1200 in Wilmington, NC, we’re already seeing mobile home rents upwards of $1,000-$1,200 pop up in the area. And don’t get us started on lot rents! $350-$400! This further demonstrates the industry’s room for growth compared to other asset classes.
Another big plus for the MHP industry is that it qualifies for non-recourse loans. Don’t mistake it for being easy, though. You’ll have to go through tons of hoops before they consider handing out those funds. But still, agency financing is more available now than it’s ever been in our agency. That’s a great thing!
Depreciation For Our Asset Group & Zoning Restrictions
The amount of depreciation our asset group offers compared to others is phenomenal. You can use a lot of accelerated depreciation, especially with park owned home communities. We also have the hardest zoning to get of all the other zone classes.
For starters, they don’t issue new MHP zoning anymore, or if they do, it’s very rare. That’s a big part of why we lose so many parks a year as compared to building. This is often the result of Nimbyism, or “Not In My Backyard”. Locals may not want trailer parks near their property, so they put pressure on their municipalities to obstruct them.
Competition In The MHP Industry
While the MHP industry is still competitive, it’s still less than that of other asset groups. This is evident when trying to win a contract on a park. When you’re bidding against other buyers, it’s usually less crowded than other fields. We’re also in the process of consolidation. This refers to the amount of owners that are buying as many parks as they can into a portfolio.
This removes most mom and pops that own just one park out of the equation. The portfolio sales are selling at a very low cap rate, for a much higher amount per pad or park from a price standpoint than the one off parks. If you merge 2000 lots into a single MSA or state, your exit is almost guaranteed as long as the market continues. Buying, stabilizing, and packaging them together as a portfolio can spell big profits. That’s what a lot of the upper tier buyers are doing right now.
The MHP Expert
We could go on all day about the benefits of these investment opportunities. Are you ready to see a real return on your investment? Reach out to the Mobile Home Park Expert for a full breakdown of your options!