Some people dream of a Rolex watch. Others want an exotic sports car. But the best Christmas present is an income property with strong fundamentals – because it can buy you both and still more after that. So why is an income property such a great thing to own, and how can you pick a winner from a loser?
Income properties have no pressure to sell
When you buy raw land or any real estate that provides no income, you are always under pressure to sell it to pay your bills. But income properties never need to be sold, as they distribute out their income monthly. If you get offers to sell that’s great, but there’s no requirement to do so to harvest the proceeds.
You can spend all the money every month and there’s still more coming in the door
In many forms of real estate, you have a big payday when you sell it, but then you plow through that and there’s nothing left. With income properties, you can theoretically spend every penny every month, and there’s a new pile of money coming to you again with the new month.
Look for location, location, location
For an income property to work, you need a terrific location. Real estate is completely tied to geography, and a great location is essential for success. Understand the market drivers for the type of property you are acquiring and make sure it is superior. Location begins with the region and state it is located in, and continues on down to the specific niche market within that city or town. You choose locations randomly, you will only have random results. You don’t have to buy a lot of properties, so take time and make sure that the location you are buying is a perfect 10.
And choose a niche on the right side of the megatrends
The Mississippi River flows south at 3 miles per hour. So it’s a whole lot easier to float down it than to row against it upriver. In fact, with no effort at all you can travel from Minnesota to Louisiana just sitting on a raft. The same is true with all megatrends – you want to be on the correct side of what’s going on in the U.S. today. So think about what the trends are in the America. Economic weakness. Lack of affordable housing. 10,000 Baby Boomers retiring per day. You can probably come up with at least ten more. We feel that mobile home parks have the best fundamentals in real estate today, and that’s why we’ve bought over 250 mobile home parks to date. But form your own decisions based on the trends and see where you feel strongly enough to invest your time and money. If you hit it right, your income property will grow in value and distributable cash simply from being in the right place at the right time.
If you want to give the Christmas gift that keeps on giving, then buy yourself an income property. You will be amazed how that additional income stream can change your life for the better – year round.
Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 21,000 lots in 25 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com.