Why Mobile Home Parks Have A Low Tenant Turnover Rate
Updated: Jul 22, 2020
Welcome back to the Passive Mobile Home Park Investing Podcast. My name is Andrew Keel, I'm a real estate investment specialist, entrepreneur, fitness advocate and family man. On today’s episode, I’m going to be talking about the fourth reason why you should invest in mobile home parks. Reason #4 discusses how mobile home parks boast around a 5% tenant turnover rate, annually. This means that around 95% of mobile home tenants this year, will be there next year. Today I’ll talk about what that means for investors.
Would you like the pre-investment checklist that I use to review mobile home park deals before I invest in them? We are offering this as a free gift if you go to iTunes and leave a five-star review. To get the pre-investment checklist, leave us a five-star review on iTunes and then send us an email at PassiveMHPinvesting@gmail.com. In the email, please tell us who you are, what screen name you used to leave that review, and we’ll send the pre-investment checklist, directly to your inbox.
00:20 - Hello and Welcome
00:33 - Reason #4: Low turnover rate
01:06 - Moving mobile homes
01:55 - Sun Communities statistics
03:20 - Exception: Park-owned mobile homes
03:53 - Conclusion and teaser for the next episode
04:10 - Pre-investment checklist
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Welcome to The Passive Mobile Home Park Investing Podcast with your host Andrew Keel. This is the podcast where you can get the education you need to invest 100% passively in a highly profitable niche of mobile home parks.
Welcome to the Passive Mobile Home Park Investing Podcast. I'm your host Andrew Keel and today, we're going to discuss the fourth reason why you should invest in mobile home parks. Reason number four is an absolute game-changer. Mobile home parks boast around a 5% tenant turnover rate annually, meaning that about 95% of the tenants in a mobile home park this year will be there next year. Apartment complex annual tenant turnover rates are closer to 40%.
The big reason for this is the fact that mobile homes aren't exactly mobile. Ninety-five percent of all mobile homes are never moved from the spot where they were first installed. The reason for this is the costs associated with moving a mobile home. To move a mobile home just 100 feet away from its original spot can cost around $4000 and that's due to the teardown cost, the blocking, leveling, tie-downs, utility hook-ups, et cetera. The average mobile homeowner simply can't afford to move their mobile home.
Data collected by Forbes, and published in the college investor's guide to mobile home park investing, revealed that 75% of mobile homeowners expect to stay in their homes for five years or more. Sun Communities, the second-largest owner of mobile home parks in the world, wrote in their June 2020 investor presentation that across their 117,000 mobile home sites, they hold an annual tenant move out rate of less than 1%. Also, their average tenant stays in their communities for 14 years. Those are amazing numbers.
Many mobile home tenants are retired and on a fixed income and the last thing they want to do is make a major move. Rent is practically guaranteed to be paid on time and in full by this class of tenants. Unlike younger tenants who might lose their jobs during a recession, older folks on social security or SSI won't have a problem paying rent. We've noticed this currently across our portfolio during the COVID-19 shutdown.
Considering that more than 50% of Americans have less than $1000 in their savings account, moving a mobile home is extremely rare. The annual tenant turnover rate in a mobile home community being around 5% saves a lot of expenses, including marketing costs, management time, and typical turnover maintenance expenses. I should note that park-owned home communities do have higher turnover rates, and this is another reason why I'm not a fan of this model. I will discuss this more in a future episode all about the park-owned home business model.
Lower tenant turnover is a huge reason why you should invest in mobile home parks. That's it for this episode, please subscribe to get lined up to receive next week's episode, which is going to discuss the low repairs and maintenance expenses found on mobile home park financials. Thank you so much for tuning in.
Would you like the pre-investment checklist that I personally use to review mobile home park deals before I invest in them? We are offering this as a free gift to those of you who go to iTunes and leave our podcast a five-star review. To get the pre-investment checklist, leave us a five-star review on iTunes and then send us an email to firstname.lastname@example.org. In the email, please tell us who you are and what screen name you used to leave that review and we will send out the pre-investment checklist directly to your inbox. It's that easy. Once again that email address is email@example.com. Thanks again for tuning in.