Investing 101: What Real Estate Gurus Don’t Tell You About Mobile Home Park Investing
Ever since this article came out, there’s been quite a buzz about investing in mobile home parks. Now it seems like everyone wants to become a mobile home park investor. Though it can be lucrative (if done right), the truth of the matter is you just can’t become successful overnight.
Most of the information online points to all the positives of owning a mobile home park. But what are the negatives? What is the dark side of being a mobile home park investor? Well, nobody ever talks about that.
With so much information out there including books and courses to sell on the subject of buying mobile home parks, there are a few things real estate gurus just don’t tell you. Here they are:
Buying a Mobile Home Park Requires Money
Even if you’re going to be using owner financing, you need money to buy mobile home parks. Most seller transactions require at least 25% percent down of the purchase price. And that’s just for acquisition.
This does not include closing costs and what you need to pay for to do your due diligence on the deal. So figure even more money on top of that. Plus, you’ll have to figure in costs to fix up any infrastructure or unexpected issues that come up once you already own the mobile home park.
Once of the things you may not know is that some of the real estate gurus teaching these courses and bootcamps already had the money when first getting into mobile home park investing. I know of some who had seven figures to spend from prior business deals when they decided to get into investing in mobile home parks.
Buying a Mobile Home Park Takes Time
If you want to find the right deal, it’s going to take time for you to find just the right mobile home park to buy. It’s not going to happen overnight.
I’m not talking months either. It could be years until you find your first one.
Personally, I know an investor who took 3 years to find and negotiate a mobile home park to buy. And this was not a new investor. This was an experienced real estate investor with many years of experience under his belt.
Believe me, you’ll probably find a mobile home to buy before you find a mobile home park. If you’re planning to invest in mobile home parks, just know it may take time to find and negotiate your first one to buy.
Buying Mobile Home Parks Requires Experience
I’ll be honest. There are a lot of inexperienced real estate investors buying mobile home parks. And I’m not talking about inexperience in real estate but as a mobile home investor. So what’s the big deal?
Well, if you don’t have the experience there’s going to be a lot of things you won’t know what to do with when owning and managing your own mobile home park.
Sure, you can go off of what you learned in your mobile home park investing course or bootcamp. But some techniques work better for others. And you can only find that out through experience.
I talk more about the importance of experience and the advice I received from Lonnie Scruggs himself in my Mobile Homes vs. Mobile Home Parks article.
Owning a Mobile Home Park Requires Time
So you’ve bought your first mobile home park. Congratulations! Now you can just sit back, relax and let the money come in…right?
If you’re going to be a mobile home park owner, managing and operating the park is going to take time. And if you don’t have the experience as a mobile home investor, it’s going to be even worse.
What many folks don’t realize is that you simply cannot just sit back and relax. You need to put work into the deal.
As explained in this book, there are many things you may not know as a mobile home park investor regarding your operations until you actually visit the site and see what’s going on. And yes, your employees may not always be telling you the exact truth.
Owning a mobile home park takes time. It can take time away from your family. It can take time away from your personal life. It can take time away from doing the things you enjoy doing. As I learned from this investor, investing in mobile home parks wasn’t what it was all cracked up to be.
If you’re going to become a mobile home park owner, know that it may take time away from the things you enjoy. And I will say, this is why Lonnie preferred investing in mobile homes — he was able to take time to do the things he enjoyed doing. He didn’t have to be there all the time.
It’s important to set your priorities so you can live the kind of life you want to live and do the things you want to do, not have to do. When deciding whether or not to invest in mobile home parks, be sure you make the right decision for you and your family.
Owning a Mobile Home Park Requires Money for Reserves
Think you can just sit back, let the money come in and pay for the operation expenses of your mobile home park? It’s not going to happen…especially as a new mobile home park investor.
When you own a mobile home park, there’s going to be unexpected things that come up. And this requires money.
(Note: Even as a mobile home park investor, I run into the unexpected. But at least, I’m doing it on a smaller scale. I talk more about the unexpected over the span of my career as a real estate investor here.)
As explained by this mobile home investor, he was lucky to be able to cover the expenses of his own mobile home park. But after that situation, he decided to get out of the business completely.
And I will tell you, after the flood hit in one of the mobile home parks I worked in — it was sold off by the owners. Why? Well, they simply did not have the funds to fix up the park. It was a mess. They were simply a “mom and pop” operation.
Going in, know that if you’re going to be a mobile home park owner you’re going to need a large amount of money for reserves. Be prepared for the unexpected.
Conclusion and Bonus Video
So you see, there’s a lot more involved when it comes to being a mobile home park owner. These are just a few things real estate gurus may not tell you when it comes to investing in mobile home parks.
Personally, I know of some investors who have attended mobile home park bootcamps or paid for high dollar courses who decided not to pursue mobile home park investing afterwards. Many ended up selling their courses on eBay such as this one.
If after reading this article, you’re still interested in investing in mobile home parks you may want to check out my “Top 10 Mobile Home Investing Books” which has a few recommendations on books (and even a course) on mobile home park investing.
Remember, only you can decide what’s best for you. Don’t let real estate gurus fill your head with hopes and dreams only to find yourself in a nightmare. Be realistic. Do your research. And take the time decide what’s right for you and your family.
As an added bonus, I decided to do a short video about this article. Here it is:
What did you think? Did you enjoy the video?
Hope this helps. Happy investing!
Have a question? Join the new discussion group where you can ask questions, share and discuss.
Interested in learning more about mobile home investing? Be sure to check out my book, thanks for reading!
Adventures in Mobile Homes: Official Book Trailer