The average American knows little about owning and operating a mobile home park. And why should they? It certainly is not a course you’ll find in college, or a book you’ll find at a bookstore. I’ve never met another mobile home park owner in a casual setting, such as a cocktail party, in my entire life. So the only exposure that the average investor has to the mobile home park industry is through such shows as “COPS” and comedians like Jeff Foxworthy. And the amount of misinformation that is out there is amazing. Here’s a list of the top misconceptions about mobile home parks, as well as the truth to debunk those myths.
Mobile home parks are filled with nothing but crazy poor people
Sure, there are those types of mobile home parks out there. But 8% of the entire U.S. population lives in a mobile home. That’s a huge number. The average family living in a mobile home has a normal job, a normal income, and drives a normal car. It’s true that they normally do not have high incomes – roughly $20,000 to $30,000 per year – but are certainly not “poor”. In fact, in some parks, they may earn several times that much. Don’t forget that there’s even a mobile home park in Malibu, California that has seen residents such as Pam Anderson and Sean Penn. Those scenes you see on COPS are deliberately skewed to the worst mobile home parks in the U.S. In the famous movie “Deliverance”, it portrayed that the average household in the deep south has a kid on the porch playing a banjo. Is that what you see when you drive through Atlanta?
Mobile homes can pull out at any time, so there’s no consistency in revenue
The word “mobile” was the worst choice the industry could have made. It’s been replaced by “manufactured” home. The reason? These things are anything but mobile. It costs around $3,000 to move a mobile home from point A to point B, and requires a special truck to do so. Studies have shown that 99% of all mobile homes are in the same location today as they were when first delivered. We own over 7,500 mobile home lots, and only have maybe 10 homes per year move. RVs are different – they can just turn on their engines, or hook up to their hitches, and they’re gone. But mobile homes never leave – most are not even road worthy.
You can’t get financing for a mobile home park
We hear this all the time. But the truth is that there are probably more options for mobile home park financing than any other real estate asset class. Why? Because mobile home parks also offer, in many cases, seller-financing. Since most mobile home park sellers are the original moms and pops, they can offer you the best financing there is – seller carry. In addition, banks love mobile home park loans because they have the lowest default rate of any type of real estate loan. And conduit? We just closed on a conduit loan a few weeks ago. There are at least five major lenders doing conduit loans right now, including Bank of America and Citigroup.
We don’t need to hire Mythbusters to solve these misconceptions about the mobile home park industry. The bottom line is that mobile home parks are the highest-yielding asset class in commercial real estate. If you want COPS and Jeff Foxworthy to scare you away from of these yields, that’s your own problem. You do owe it to yourself to investigate the industry.