PART 4:
Options For Buying A Mobile Home Community
Updated: Nov 11, 2021
Tidbit – If you’re a fan of Ozark, the well-known Netflix series, you would know that the show takes place in the Ozarks of Missouri. How great is that!
You may wonder, what’s so great about the Ozarks besides the fact that a world-renowned show pays an ode to it? Let’s start by dissecting our top choices. First, we have Springfield, MO, which boasts a thriving economy, amazing school districts, and a bustling community with great neighborhoods. Additionally, the population of Springfield, MO is on the rise (455,000 people and counting), the median income sits at $43,000. Now, let’s talk about Branson, MO. Branson, MO displays a promising population of 86,000 people and a median income of $38,000. Sprinkle a load of recreational activities and an ever-increasing tourist appeal, and you have another amazing neighborhood and community. But, what’s missing?
Solving a Housing Need
The median home price in both wonderful neighborhoods comes to $156k. That means that the average homeowner must come up with at least this much to settle in the Ozarks. Unfortunately, not everyone can afford to pay the down payment to secure such a mortgage. Moreover, not everyone wants to pay that much to have a roof over their head. We live in an era where downsizing and mobile home communities are gaining traction as an affordable, yet comfortable way of seeking housing.
What’s in a mobile home community? Many people relate mobile home communities with trailer owners who park for a while and are gone the next month. However, that has changed. Mobile home communities now feature every amenity you would find in a conventional home. They have yards, swimming pools, garbage pickup, grounds management, and utility connections. Mobile home communities are no longer temporary bases to park than move to the next lot. Instead, the bases have become permanent lots where mobile homeowners can park their homes for eternity.
As an investor, the term ‘mobile’ may scare you. Although, it shouldn’t. Moving a mobile home is a big task, most homeowners will only settle on a lot where they are sure they are willing to stay for a long time. In some cases, they sell their homes rather than move them to another site. Again, moving the homes comes with added costs. The goal is to make the communities attractive to appeal to and retain mobile homeowners.
You might also be wondering, ‘How can you be sure there’s demand for mobile home communities?' It’s a good question. Rather than assume that people would be willing to live in mobile home communities, we conducted a survey that revealed more people were looking into mobile housing. Many people responded to our ad, asking if the advertised mobile home was still available, demonstrating that the project was feasible. Recent market surveys align with this need.
Introducing Our Portfolio
We have four mobile home communities lined up:
· Rolling Meadows,
· Fairfield Acres,
· Suburban Acres, and
· Cedar Lane.
So, what makes each community a good deal?
We have already done the math and know that each community is available to the market at a far much lower price than the market lot rent. Take Rolling Meadows, for example, currently available at $215 per month and the market rent is at $300. Once we rehab the community, we will acquire the extra $85 per lot, per month. The same holds for Suburban Acres, Fairfield Acres, and Cedar Lane, which have differences of $102, $100, and $92 per lot, per month.
Additionally, we know that these communities can house more lots than they currently do. With rehab currently in the works, we should be leasing out more lots and capitalizing on the gaps presented above. These are a few of the key factors influencing our choice of communities.
Nevertheless, there is the financial aspect. All the communities were purchased off the market from three different sellers. We received them at an average of $14,000 per community, which was quite a good price, considering they were already equipped with infrastructure. Each community had also undergone the zoning process, leaving us with the lighter part of the load.
Investing in Mobile Home Communities
Are you sold on the idea of mobile home communities? We are too! That’s why we want to break down how you can also be a part of this journey. When examining the budget, we have estimated it to be $5,705,750. From the budget, $500,000 (at a 5% rate) will be through seller financing from the Rolling Meadows seller, and $4,005,750 (at a 4% rate) will be from debt. Furthermore, $1,200,000 is set aside for equity financing. It is estimated that we will put up an average of $250,000, covering about 20% of the equity financing and leaving 80% available to potential investors. This total amount will cover the following expenses for all four mobile home communities:
Tidbit – If you’re a fan of Ozark, the well-known Netflix series, you would know that the show takes place in the Ozarks of Missouri. How great is that!
You may wonder, what’s so great about the Ozarks besides the fact that a world-renowned show pays an ode to it? Let’s start by dissecting our top choices. First, we have Springfield, MO, which boasts a thriving economy, amazing school districts, and a bustling community with great neighborhoods. Additionally, the population of Springfield, MO is on the rise (455,000 people and counting), the median income sits at $43,000. Now, let’s talk about Branson, MO. Branson, MO displays a promising population of 86,000 people and a median income of $38,000. Sprinkle a load of recreational activities and an ever-increasing tourist appeal, and you have another amazing neighborhood and community. But, what’s missing?
Solving a Housing Need
The median home price in both wonderful neighborhoods comes to $156k. That means that the average homeowner must come up with at least this much to settle in the Ozarks. Unfortunately, not everyone can afford to pay the down payment to secure such a mortgage. Moreover, not everyone wants to pay that much to have a roof over their head. We live in an era where downsizing and mobile home communities are gaining traction as an affordable, yet comfortable way of seeking housing.
What’s in a mobile home community? Many people relate mobile home communities with trailer owners who park for a while and are gone the next month. However, that has changed. Mobile home communities now feature every amenity you would find in a conventional home. They have yards, swimming pools, garbage pickup, grounds management, and utility connections. Mobile home communities are no longer temporary bases to park than move to the next lot. Instead, the bases have become permanent lots where mobile homeowners can park their homes for eternity.
As an investor, the term ‘mobile’ may scare you. Although, it shouldn’t. Moving a mobile home is a big task, most homeowners will only settle on a lot where they are sure they are willing to stay for a long time. In some cases, they sell their homes rather than move them to another site. Again, moving the homes comes with added costs. The goal is to make the communities attractive to appeal to and retain mobile homeowners.
You might also be wondering, ‘How can you be sure there’s demand for mobile home communities?' It’s a good question. Rather than assume that people would be willing to live in mobile home communities, we conducted a survey that revealed more people were looking into mobile housing. Many people responded to our ad, asking if the advertised mobile home was still available, demonstrating that the project was feasible. Recent market surveys align with this need.
Introducing Our Portfolio
We have four mobile home communities lined up:
· Rolling Meadows,
· Fairfield Acres,
· Suburban Acres, and
· Cedar Lane.
So, what makes each community a good deal?
We have already done the math and know that each community is available to the market at a far much lower price than the market lot rent. Take Rolling Meadows, for example, currently available at $215 per month and the market rent is at $300. Once we rehab the community, we will acquire the extra $85 per lot, per month. The same holds for Suburban Acres, Fairfield Acres, and Cedar Lane, which have differences of $102, $100, and $92 per lot, per month.
Additionally, we know that these communities can house more lots than they currently do. With rehab currently in the works, we should be leasing out more lots and capitalizing on the gaps presented above. These are a few of the key factors influencing our choice of communities.
Nevertheless, there is the financial aspect. All the communities were purchased off the market from three different sellers. We received them at an average of $14,000 per community, which was quite a good price, considering they were already equipped with infrastructure. Each community had also undergone the zoning process, leaving us with the lighter part of the load.
Investing in Mobile Home Communities
Are you sold on the idea of mobile home communities? We are too! That’s why we want to break down how you can also be a part of this journey. When examining the budget, we have estimated it to be $5,705,750. From the budget, $500,000 (at a 5% rate) will be through seller financing from the Rolling Meadows seller, and $4,005,750 (at a 4% rate) will be from debt. Furthermore, $1,200,000 is set aside for equity financing. It is estimated that we will put up an average of $250,000, covering about 20% of the equity financing and leaving 80% available to potential investors. This total amount will cover the following expenses for all four mobile home communities:
