Why Your Mobile Home Park Isn’t Scaling
Mobile home parks can be incredibly difficult to scale in terms of rental income. First and foremost, you are constrained by the number of lots on the property. Secondly, you are constrained by the amount of rent you can charge and how much you can raise rent each year. Let’s take a look at why mobile home parks can be difficult to scale, especially if you have a smaller mobile home park.
There is a rent limit you can charge your tenants
Generally speaking, mobile homes are considered to be a more affordable housing option for people. Therefore, they might not be accustomed to paying a higher rent amount. Nationwide, the average rent for a mobile home lot ranges between $125 to $800. The average American who rents an apartment pays between $1,300 to $1,800 per month.
If you want to raise rent on your mobile home lots, you have to do it incrementally. Your renters can easily absorb a monthly rent increase of $100 to $200, but you have to spread it out over a period of years. If you have twelve lots, and charge $500, your mobile home park brings in about $6,000 in revenue in one month. To bring your monthly rent per lot up to $700, you could do it by $50 increments over a period of four years. The bottom line is that it takes longer to increase your rent to a number where owning the lot is profitable.
Your mobile home park only has a certain number of lots
Most mobile home parks have a limited number of lots. Generally speaking, you need at least 20 lots in your mobile home park for it to be a worthwhile endeavor. Some cities have regulations pertaining to the size of mobile home parks and how park owners can expand the land size of their property. If you can scale the size of your mobile home park, it can be an easy way to increase your rental income. However, the number of lots can be a constraint on your ability to scale the park.
You have uninhabitable lots in your mobile home park
Mobile home parks accrue uninhabitable lots for a wide variety of reasons. Sometimes, the hookups for water and electricity break. Debris from a previous tenant may make the lot unlivable. Sometimes, an old mobile home is in need of major repair and the previous tenant may not elect to take the unit with them. An uninhabitable lot can be expensive, because it’s rent that you are missing out on.
Get a fast cash offer on your mobile home park
A fast cash offer can be a quick way to sell your mobile home and move onto another more lucrative investment. Mobile Home Park Instant Offer will make you a cash offer on your park, even if you have residents. We will handle all the paperwork and make sure the sale goes smoothly.