If you’re considering investing in real estate over the coming months, you might be reviewing local commercial properties or investment homes in your area. But one option you may not have considered is the mobile home park. This growing sector of the commercial real estate marketplace is a great option for a number of investors. And within this latest post, we’ll explain some of the benefits of investing in mobile home parks.
One of the leading advantages of investing in local mobile home parks is that there’s a limited supply of mobile parks across the marketplace. Cities work to limit the number of mobile home parks in their area, so mobile homes within that property will only gain in value due to the lack of competition. That can help to secure your investment against potential drops in price in the long-term.
Within a mobile home park, it can be difficult and costly for a tenant to pack up their home and move to a new property. That means there's a low turnover rate within the park. So that puts you in a strong position as the owner of the mobile park when you must increase maintenance fees and improve your business model in the years to come.
Limited Structural Maintenance
One reason borrowers refrain from investing in apartment buildings and other multifamily properties is the amount of maintenance these properties require. When an air conditioning system breaks or a heater has a malfunction, the owner of the property must respond with a maintenance solution. However, when you invest in mobile home parks, you're only investing in the land on which the homes are built. That limits your responsibility for any home maintenance that might be required.
When an investor places their money in an apartment building or other commercial real estate properties, their assets are depreciated during a period of 27.5 years. However, because mobile homes require land improvements in the form of electric poles and water lines (and so on), this asset class depreciates every 15 years. That can bring a major tax benefit to mobile home owners over several years and can help mitigate significant tax exposure for new investors.
There is a strong demand for a supply of affordable, well-kept mobile homes throughout North America. With the rise in traditional housing costs, the demand for affordable mobile home parks could increase with time.
Working with an expert in commercial real estate can help you to determine the right asset for your investment resources. To learn more about the range of loan options, speak to our experts today. We can help you navigate the marketplace and pinpoint options that allow you to allocate your assets effectively for the years ahead.