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Thursday, March 7, 2013
Michael Hathman Explains Why Mobile Home Parks & Mobile Homes Make Great Investments
Warren Buffett Invests In Mobile Homes & Mobile Home Parks!
Many investors are looking to invest in something that is relatively safe & has a good, continuous return. It makes sense that investors should be taking note at what one of the richest men in America is doing. Warren Buffet invests in mobile homes & parks!
Usually housing provides the answer. But not just any housing—mobile homes and mobile home parks. The return is very strong and when investing in mobile homes—those returns tend to be lucrative. There is substantial wealth to be made in mobile home and mobile home park investing as well.
Statistics & Facts
Demographics and statistics make the argument for why savvy investors are actually plunking down good money to make great returns.
Nearly 20% of all Americans make less than $20,000 per year. Approximately 33% of these families can afford roughly $650 per month and many more families can afford to pay upward to $900 a month.
The benefits of owning a mobile home versus being in an apartment offers more privacy, less noise, small yard, the chance to own a pet and a subdivision-like neighborhood.
Mobile Homes vs Traditional Housing
Government regulation of mobile home housing helped to drive down costs during the 1970s. This strong regulation allowed for much better construction cost controls to be put into place helping to suppress costs.
Additionally, while stick-built home prices skyrocketed, mobile home prices tended to rise but only at a much slower pace making mobile homes a far more affordable housing alternative for many families.
Mobile Home Parks
Mobile home park rents remain very affordable around $200—$400 per month. Compared with traditional housing payments of $700(+), these housing costs are very affordable.
Owners of mobile home parks make good rental income at rents this low. Typically, the average expense for mobile home parks is 30—40% of the park’s rental income.
Mobile home parks typically sell for 7—10% capitalization rates and owners are renting land only which means no savings is required for major capital improvements. Also, rents can increase yearly by as much as $10—$20 for lot rent.
A Captive Market
One of the most attractive features of investing in mobile home parks is that renters simply won’t move out. The cost for doing so is roughly $4000(+) to relocate a home. Few tenants can afford to move which creates a “locked-in” tenant base. Since most owners don’t want to lose their homes, the lot rent is a very reliable source of income to any investor.
Even in the softest economy, mobile home rents are very reliable as all families are in need of financing or purchasing an affordable home.
Since the mobile homes are “fairly” permanent, investors typically do not have to worry about loss of revenue as with more transitory businesses.
It’s hard to score a long shot or touchdown on the right investment but it can be done…
Here are just a few of the benefits of investing in mobile home parks and mobile homes:
The income stream is very steady. Most tenants don’t have the thousands of dollars to relocate and are therefore mostly “captive” with regard to residency.
Rental income is more likely to produce a positive revenue as compared with other business opportunities.
Residents are more likely than not to pay their lot rents—because they don’t want to lose their residence in an eviction.
Why Are Mobile Homes Parks So Profitable?
Nearly 20% of all Americans make less than $20,000 per year.
Approximately 33% of these families can afford roughly $650 per month and many more families can afford to pay upward to $900 a month.
Imagine the profitability of a park that has 400 lots—75% which are rented at a rental rate of $350 per pad. Monthly, this would total $105,000 per month in revenue. Annually, that’s $1,260,000 in rent.
But it does not stop there! Imagine, filling the entire park to 100% capacity with rent-to-own mobile homes. 100 mobile homes are purchased and brought into the park. The rent is set at an average of $750 per unit (which includes lot rent) and the lease time is 7 years. Additional monthly revenue to the park will total $75,000 monthly and annually that would be $900,000 in total rents. The value of all 100 leases for all 100 units: $6,300,000 for all 7 years. That is definitely an eagle!
“Billionaire Warren Buffett, who is known for his attraction to value and low costs, is the largest owner of mobile home financing and manufacturing in the United States.”
– National Real Estate Investor, April 15, 2011
“One thing is for certain is that Buffett only invests when he finds great value and, in today’s America, there is a huge discrepancy between supply and demand when it comes to affordable housing.”
– The Commercial Investing Center, February 21, 2011
Rent-to-Own / Buying Mobile Homes
The Credit Collapse of 2007—08 created incredible pressure on the housing sector. Since then, nearly all of the lenders have pulled out of the mobile home financing market. As a result, most buyers must obtain seller financing, a rent-to-own arrangement or pay cash for mobile homes. This opens the door to great investor wealth as a way to finance for long periods or sell for high profit creating vast profit opportunity.
For example, mobile homes can be resold to a purchaser up to a 500% profit. And rents can go for 7-10 years. For example, a mobile home on a 7-year lease at $750 per month will generate $63,000 in rent revenue pay cash for mobile homes. This opens the door to great investor wealth as a way to finance for long periods or sell for high profit creating vast profit opportunity.
Why Invest Now?
Why wait to make money, to make a great profit? Warren Buffett hasn’t and millions are clamoring for more affordable housing than ever before. Today is the day to act now. No one in business has made a profit by waiting.
A Safe Investment
Real estate investing is always a safe and lucrative venture if done right and by experienced professionals. Your investment will also be protected by a Registered Representative with Edward Jones.
$50,000(+) for mobile homes purchases only
$100,000(+) for mobile home park purchases
$1,000,000(+) for MAX profit sharing.
For More Information, please contact Storm Crow Investments: