How Hard Is It To Make a Mobile Home Park Profitable?
Mobile home parks, when run correctly, can be a great source of income. Typically, in the United States, the average net income from a mobile home park is around $2,016 according to numbers from the mid-2010s. A well-ran 50 to 60 lot park could make around $100,000 to $125,000 per year. However, many mobile home parks do not always run efficiently for their owners. Learn about some of the barriers to profitability on a mobile home park.
The park lacks a dedicated property management service
Property management makes a mobile home park profitable and also ensures their cash flow. For example, a property manager can make sure that rent is paid by tenants each month and enforce evictions. When tenants are educated on when to pay their rent and have means to pay their rent through means other than cash or check, a mobile home park can be profitable for the owner.
The park has not seen an appropriate rent increase for quite some time
Rent on mobile home parks is a little bit more delicate than other types of rental properties. Since mobile home parks are often intended to be a more affordable means of housing, a sudden rent increase could cause tenants to leave. A responsible owner might increase the average rent by a certain amount over a couple of years in order to bring rents in line with market expectations.
When rents don’t go up accordingly, it can be more difficult to keep up the park. Parks with cheaper rent tend to need more repairs and have fewer amenities. Low rent can be a barrier to profitability with a mobile home park.
The park has no submetering
When mobile home parks have submetering, the cost of utilities is often on the shoulder of the tenants. Most older mobile home parks lack submetering, so landlords have to pay for the utilities. When tenants don’t have to pay for utilities, they are likely to be less aware of how much water or electricity they use. Submetering can be a large cost to shoulder for the typical mobile home park owner, but over the long term it is a good investment. Lack of submetering is a huge barrier to trailer park profitability.
Lots are not habitable
Lots can become uninhabitable for a variety of different reasons. Hookups for utilities may no longer work. There may be a mobile home on the lot with major structural issues that keep the home or the lot from being rented. Lots that cannot be rented increase the overall value of the lot because it decreases the park’s overall monthly cash flow.
The park might need major upgrades
Many trailer park owners don’t perform certain types of maintenance on their property. For example, paved roads going in and out of the park may have potholes. Over the years, fences and landscaping around the park may have come into disrepair. Some mobile home parks have amenities like a laundry area or kids play area. These areas might have been maintained and upgrading the structure of the park can be an expensive undertaking.
The park may be in a rural area
When a trailer park is located in a rural area, the owner may have a hard time keeping lots occupied. Trailer parks in rural areas tend to have a higher unit turnover rate than parks in urban areas. This can be for a wide variety of reasons:
- There aren’t good jobs in the area to let tenants pay their rent.
- There might not be amenities like a grocery store for people to purchase food and things for their home.
- There might not be a good school district for the tenant’s family.
Rural trailer parks can be a challenge to maintain profitability because of the high month-to-month turnover.
You may deal with difficult tenants
Sometimes, tenants can be a strain on the profitability of a mobile home park. Sometimes, tenants will have a hard time paying their rent if they become unemployed. They could also create issues for other tenants that live in the community. An eviction can be a costly endeavor for a mobile home park owner. It can cost as much as $3,000 to evict a tenant.
Tenants can also be a drain on your resources. For example, if you have a tenant who frequently needs maintenance on their unit, this can cost you money that you pay to vendors. Difficult tenants can be a huge drain on your mobile home park’s profitability.
Why can it be difficult to make a park profitable again?
Many mobile home parks in the United States are family operations. They may lack access to financial capital to do major upgrades to their units and bring uninhabitable lots back to livable conditions. Other mobile home park owners may lack relationships with vendors and contractors to do the work needed. Some mobile home park owners have a hard time making their units profitable because they lack the time.
Mobile Home Park Instant offer will help you get your unit off your hands with a fast cash offer. We have the resources to take over a park, make it habitable, and work with your tenants who are currently living there.