Mobile home Park investing is not the exciting cryptocurrency, high-flying tech startup or trophy office tower you boast of owning. A mobile home Park is just a Parking lot filled with single or double space that will rip out a lot of cash flow.

I own a portfolio of 23 mobile home parks and help real estate investors grow their portfolios with mobile home Park investments. There are many unique aspects in the industry that make mobile home parks a compelling investment. But, for some strange reason, people don’t gather around me at parties to learn about the intricacies of them. So to keep your focus, let’s focus on just one power most parks share: consistency.

A portfolio of mobile home parks purchased at the right price is a surprisingly bankable investment. Mobile home parks provide profits year after year, while their cousins (apartment buildings) are often much more volatile. Why?

Compared to apartment buildings, mobile home parks tend to,:

We have a guest turnover: only about 2% of homes leave our parks a year, compared to the average year of apartment renters, which was 53% in 2015.

– ITE lower operating and capital costs due to less maintenance costs and convenience: We rent land that is quite cheap to maintain.

Less volatile rents due to reduced competition. There is essentially no new supply of mobile home parks. Strict zoning laws make them virtually impossible to create. Compare that to apartment buildings, of which more than 350,000 new apartments were built last year. It’s an ongoing supply of new competition for existing apartments. Sounds awful. Who wants to go out in the cold and kill a new dragon every year? I’d rather go back to the castle by the fireplace, counting the rent of the land.

All these differences lead to consistent profits. Consider the earnings track record of Sam Zell’s lifestyle stocks (ELS), the largest company in the mobile home Park space (and our best proxy for industry data that doesn’t exist). Since 1998, ELS has achieved positive profit growth in every quarter. This is impressive: America experienced a huge housing crisis in 2007, but ELS still increased profits. This is not an accident or something unique to ELS. This sequence is structural for the industry.

Comparison with other types of commercial real estate

To fully understand the lower capital advantage of mobile home parks over other non-multi-family real estate assets, here are the remaining major types of commercial assets and their obstacles to consistent cash flow performance.

Office real estate: Employment is very susceptible to recession and requires huge ongoing capital expenditures related to building systems and staffing. Office landlords must spend hundreds of thousands and often millions on new tenant improvements and broker leasing commissions. These costs are paid in advance. If the tenant goes bankrupt on the first day of the lease, the landlord cries.

Retail properties: They are very susceptible to recession, and many of them are now methodically crushed by online shopping.

Hotels: They come with high fixed costs – and you can’t fire staff if occupancy is low one night.

Industrial properties: Although industrial properties tend to have the lowest current capital needs near mobile home parks, tenant concentration can be a problem. If your biggest tenant is by default, you’re in trouble.

In contrast, mobile home parks are virtually recession-proof, with low fixed costs and minimal capital needs. They have lower turnover rates, do not require many staff and have highly diversified tenant bases. In other words, they are consistent.

How to make your first mobile Home Park Investment

If you are a passive investor interested in co-owning parks, There are quality sponsors out there that you can invest with. If you prefer to roll up your sleeves and do the work yourself, here are some tips:

Don’t start small: Counterintuitively, you don’t want to crawl before walking into a mobile home Parking lot. Buy a Park large enough (50 seats) to provide a variety of tenants and support a property Manager on site (or nearby). If you go small, you will become a de facto property Manager and need to personally collect the rent and comply with the rules.

Narrow your search: You’ll have a hard time competing with larger, more established players on brokerage deals. Don’t plan to find much on the Internet. It took me years and a lot of cold calling to develop consistent flow deals. If this is your first deal, your best strategy is to focus on multiple markets and deal directly with the owners.

– Stay away from private utilities: if at all possible, stay far, far away from private utilities. The cost of replacing private electric, gas, water or sewer systems is often six figures and sometimes seven figures depending on the size and type of system. Do you want 100 families to call you in the middle of the night to report a gas leak? If you’re not very lonely or very bored, probably not.

Safe long-term debt: When mobile homes fail, it is often because a short-term loan has come due and the owner cannot refinance.

Make sure you have time to monitor the asset: Mobile home parks don’t work themselves. You need the right team, software and systems to manage them for you. Or you have to do it all yourself. If you are looking for mailbox money, look elsewhere.

Conclusion

Consistency may be boring, but it is crucial to long-term investment success. You can’t increase cash flow if you have to keep reinvesting in property just to keep things afloat. If you can’t grow profits, you’ll be too dependent on market timing and interest rates to achieve compelling returns.

The mobile home Park industry has been reliably profitable due to its structural advantages that keep mobile home Park supply, tenant turnover, current capital and costs low. This allows investors to complicate capital as income growth goes to the bottom line and is not diluted by unexpected capital expenditure.

I own a portfolio of 23 mobile home parks and help real estate investors grow their portfolios with mobile home Park investments. There are many unique aspects in the industry that make mobile home parks a compelling investment. But, for some strange reason, people don’t gather around me at parties to learn about the intricacies of them. So to keep your focus, let’s focus on just one power most parks share: consistency.

A portfolio of mobile home parks purchased at the right price is a surprisingly bankable investment. Mobile home parks provide profits year after year, while their cousins (apartment buildings) are often much more volatile. Why?

Compared to apartment buildings, mobile home parks tend to,:

We have a guest turnover: only about 2% of homes leave our parks a year, compared to the average year of apartment renters, which was 53% in 2015.

To fully understand the lower capital advantage of mobile home parks over other non-multi-family real estate assets, here are the remaining major types of commercial assets and their obstacles to consistent cash flow performance.

Retail properties: They are very susceptible to recession, and many of them are now methodically crushed by online shopping.

Hotels: They come with high fixed costs – and you can’t fire staff if occupancy is low one night.

Industrial properties: Although industrial properties tend to have the lowest current capital needs near mobile home parks, tenant concentration can be a problem. If your biggest tenant is by default, you’re in trouble.

In contrast, mobile home parks are virtually recession-proof, with low fixed costs and minimal capital needs. They have lower turnover rates, do not require many staff and have highly diversified tenant bases. In other words, they are consistent.

How to make your first mobile Home Park Investment

If you are a passive investor interested in co-owning parks, There are quality sponsors out there that you can invest with. If you prefer to roll up your sleeves and do the work yourself, here are some tips:

Don’t start small: Counterintuitively, you don’t want to crawl before walking into a mobile home Parking lot. Buy a Park large enough (50 seats) to provide a variety of tenants and support a property Manager on site (or nearby). If you go small, you will become a de facto property Manager and need to personally collect the rent and comply with the rules.

Narrow your search: You’ll have a hard time competing with larger, more established players on brokerage deals. Don’t plan to find much on the Internet. It took me years and a lot of cold calling to develop consistent flow deals. If this is your first deal, your best strategy is to focus on multiple markets and deal directly with the owners.

– Stay away from private utilities: if at all possible, stay far, far away from private utilities. The cost of replacing private electric, gas, water or sewer systems is often six figures and sometimes seven figures depending on the size and type of system. Do you want 100 families to call you in the middle of the night to report a gas leak? If you’re not very lonely or very bored, probably not.

Safe long-term debt: When mobile homes fail, it is often because a short-term loan has come due and the owner cannot refinance.

Make sure you have time to monitor the asset: Mobile home parks don’t work themselves. You need the right team, software and systems to manage them for you. Or you have to do it all yourself. If you are looking for mailbox money, look elsewhere.

Conclusion

Consistency may be boring, but it is crucial to long-term investment success. You can’t increase cash flow if you have to keep reinvesting in property just to keep things afloat. If you can’t grow profits, you’ll be too dependent on market timing and interest rates to achieve compelling returns.

The mobile home Park industry has been reliably profitable due to its structural advantages that keep mobile home Park supply, tenant turnover, current capital and costs low. This allows investors to complicate capital as income growth goes to the bottom line and is not diluted by unexpected capital expenditure.