You’d never find it in a mainstream media outlet today, but there is still fair and balanced journalism to be found in places like Hazleton, Iowa, which recently published this story on the turn-around of a mobile home park. Here’s a quote from the story:
Buchanan County Sheriff Scott Buzynski said the change is really noticeable and is having a positive effect on the whole community.
“Cleaning up this mobile home park has improved the quality of life for residents immensely. We are really glad to see this happen for Hazleton,” Sheriff Buzynski said.
Where there once was accumulation of junk and dilapidated structures, there are now flowerbeds and clean, livable mobile homes. The newest change has been new blacktop throughout the mobile home park making traveling for both drivers and pedestrians much better, as well as improving the aesthetics of the neighborhood.
“Everybody wins when improvements like this are made,” said Mayor Hayzlett. “Hazleton is doing some really positive things and we’re Hazleton proud.”
How does “bringing an old mobile home park back to life work exactly?
Most mobile home parks were built in the period between 1950 and 1970 – before virtually every city in the U.S. banned further development of them. So these parks are like time capsules that are all about a half-century old or more. When a property is that old the deferred maintenance starts to mount up, and that’s at the worst time for mom-and-pop owners who are aging and less interested in injecting more capital into their parks. That’s not to say that all older mobile home parks need big items completed like road repair and water lines fixed. Some just need a fresh attitude and stronger management on collections and rules enforcement. The term “bringing old mobile home parks back to life” simply means making the property the best it can be – which is typically far from where it is now. It encompasses all your aesthetic, management, financial and people skills.
What are the financial rewards?
Mobile home parks have extremely high rates of return when bought right. That means adherence to the long-established playbook of what to buy (solid infrastructure, safe density and good location) and paying a price that is fair but has lots of upside in rents, occupancy and cost-containment. If you do it correctly, a standard target for most park buyers is a 20% cash-on-cash return. That seems high, but investment success revolves around knowing where the best opportunities are, and mobile home parks have endured decades of a negative stigma which resulted in most Americans overlooking the chance to own and restore the U.S. affordable housing stock. All you have to do to make $100,000 per year of free cash flow on a single mobile home park is to buy one with 80 occupied lots, bring it back to life, and raise the rents $33 per month over three years. That’s the easiest way to make money in all of American investing. Mobile home parks come in all shapes, sizes and locations – it’s a very egalitarian industry in which there is a deal to fit almost any budget and time commitment.
How hard is it to do?
Some turn-arounds are easier than others. We have had deals that simply required bringing in professional management, changing the sign out front, making aesthetic improvements and enforcing monthly collections and rules adherence. Others have included massive infrastructure replacement and filling hundreds of vacant lots with new and used mobile homes. With good due diligence you can rapidly see what the difficulty level is. And, just like a model airplane kit, the higher the difficulty level the greater the reward with the end product. You should never buy a mobile home park that exceeds your skill level and financial commitment. Most buyers start with easy turn-arounds and then work their way up.
Conclusion
Whether it’s Hazleton, Iowa or Topeka, Kansas or Charleston, South Carolina, there are opportunities across America to bring old mobile home parks back to life – and to make strong financial rewards for doing so. It’s a true win/win opportunity to improve the quality of life for residents and for yourself, as well. At a time in which most of American investment opportunities are on the decline, it’s nice to find new ideas that actually have plenty of life left in them and are available to anyone who has the guts to seek them out.