Why Mobile Home Parks Have Low Repairs and Maintenance Expenses
Updated: Jul 22, 2020
Welcome back to the Passive Mobile Home Park Investing Podcast.
My name is Andrew Keel. On today’s episode, we’re going to talk about the fifth reason why you should invest in mobile home parks: and this is because mobile home parks have low repairs and maintenance expenses. I’ll share my personal experiences and I’ll explain why mobile home parks have such low repairs and maintenance expenses.
Are you interested in diving deeper into mobile home park investing? Would a community of passive investors, experienced operators and beginners be helpful to you? If so, check out the Mobile Home Park Mastermind Facebook group. It can be found at facebook.com/groups/mhpmastermind. This group is updated daily with new content and has over 1000 current members. This is a great resource for you to get all of your questions answered in one place.
00:20 - Hi and Welcome
00:30 - Reason #5: Low repair and maintenance expenses
01:30 - My first multi-family complex
02:37 - My first mobile home park
03:09 - Reducing risk
04:20 - Higher profits for passive investors
04:25 - Conclusion and teaser for the next episode
04:38 - Facebook MHP Mastermind Group
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Keel Team's official website: https://www.keelteam.com/
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Andrew Keel LinkedIn: https://www.linkedin.com/in/andrewkeel
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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. This is your host, Andrew keel. Today, we're going to discuss reason number five as to why you should invest in mobile home parks. Reason number five is that mobile home parks have low repairs and maintenance expenses and this is due primarily to the fact that most mobile home park owners do not own the mobile homes themselves, just the dirt underneath of them.
This benefits the mobile home park owners in a few ways. Number one, since the residents own their own homes, they are responsible for the typical wear and tear maintenance expenses that pop up. Number two, many residents embody the pride of homeownership and take care of their home a lot better than a typical renter would.
There are some mobile home parks that have a different model, where the park owns all of the mobile homes. I personally don't recommend investing in this model for a few reasons, including higher overall expenses, but I'll leave that for another episode.
Anyway, my very first multi-family investment was a D-grade, nine-unit apartment complex in Daytona Beach, Florida. I could see it now, I remember the day I bought it and wow was I proud. This apartment complex was built in 1920. You can imagine the deferred maintenance that had accumulated over the 100 years of low-income occupants. This apartment complex was exactly 45 minutes from the doorstep of my house to the front driveway of the complex. It being so close, or so I thought at the time, I chose to self-manage this property and you can only imagine the phone calls that rolled in, about five times per week. Everything from leaking refrigerators to squeaky door handles and running toilets, to windows that wouldn't shut all the way, you name it and I fixed it myself.
I learned the hard way that being a landlord isn't always as glorious as one would think. I ended up buying my first mobile home park six states away from where I lived in Florida. This property was in Illinois, near Saint Louis, and for a short time, I owned the nine-unit apartment complex in Daytona Beach and the 67 lot mobile home park in St Louis, Missouri. It didn't take long to see which was taking up most of my time and soon thereafter, I chose to sell the nine-unit apartment complex and ended up trading into another mobile home park.
The tenant-owned homeownership structure ultimately reduces risk. Most residents own homes in which they live and rent the land, pad, and utility infrastructure from the community owner. This results in lower operating expenses compared to single-family rentals and apartment rentals. The annual operating expense ratio, which is your operating expenses divided by your gross revenue for a manufactured housing community is 30%–40% on average, versus expense ratios of 50%–60% for multifamily apartments. Lower repairs and maintenance expenses allow for professional operators to own and manage these assets efficiently and at a distance. This is a huge factor in one's ability to scale.
Reason number five as to why you should invest in mobile home parks, is because mobile home parks have low repairs and maintenance expenses. This can result in higher profits for passive investors.
That's it for this episode. Make sure to check out next week's episode on why mobile home parks have such a low loan default rate. Thank you so much for tuning in.
Are you interested in diving deeper into mobile home park investing? Would a community of passive investors, experienced operators and beginners be helpful to you? If so, check out the Mobile Home Park Mastermind Facebook group. It can be found at facebook.com/groups/mhpmastermind. This group is updated daily with new content and has over 1000 current members. This is a great resource for you to get all of your questions answered in one place. Once again, check it out and request to join at facebook.com/groups/mhpmastermind. See you there.