Why Is Now a Good Time To Sell Your Mobile Home Park?
Mobile home parks are generally seen as a great investment for entrepreneurs. They are generally seen as a low risk investment, since the tenant base is pretty stable. The cost for repairs and maintenance tend to be extremely low. They also have a lower cost per unit than other types of rental property investments. However, 2022 may be a good year to consider getting out of your mobile home park. Let’s take a look at some of the reasons why.
Worker income is increasing
Between 2019 and 2022, hourly ages for employees have increased drastically. Even though inflation has been a persistent issue in 2022, workers are making an average of $32.05 an hour. In 2019, the median wage in the United States was $19.33 an hour. This means that even while things cost more, many people are starting to look for nicer places to live.
Inflation could be eating into your bottom line
Inflation just doesn’t hurt workers. It also means higher maintenance costs when you own a rental property. Let’s take a look at the cost of construction materials. Between 2021 and 2022, inflation was 20% for construction materials. In 2021, the inflation rate for energy was 21%. In 2022, that rate still stood high, falling to 18.43%. At the end of the day, if you cover utilities on your mobile home park, the cost of covering utilities for your tenants increased drastically two years in a row.
Property taxes could increase your cost of owning a mobile home park
When property values go up, localities often tend to increase property taxes accordingly. In states where trailer parks are prevalent, property taxes tend to be higher. Consider Nebraska and New Mexico. These are the top two states where mobile home tenancy has increased since 2009. In New Mexico, the property tax rate is .80%. In Nebraska, the property tax rate stands at 1.73%. Compare this to a state like California, which has a slightly lower tax rate. States where trailer park market share is becoming more common will likely have a higher property tax rate in the coming years.
The task of owning a mobile home park is often better left to a professional
There are around 44,000 mobile home parks in the United States, with the vast majority of them being classified as “mom and pop” operations. If you are struggling with pushing rents and occupancy, it may be better to get a fast cash offer for your unit. A cash offer will often put your mobile home park in the ownership of a real estate professional. They will have the resources to invest in repairing the property. They also will be able to let you walk away from the property with cash in hand.