Mobile Home Park Investing: The Economies Of Scale

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Mobile Home Park Investing The Economies Of Scale

• By mobile home Investors academy

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• One of the big perks of mobile home park
  investing are economies of scale. So how does
  this show up, and what tangible
  advantages do these offer investors in this
  sector?

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Economies of Scale

• Sophisticated investors and heavy-weight funds
  have long been known for investing in larger
  properties with multiple tenants. Whether these
  are office buildings, multifamily apartment
  buildings, or mobile home parks, these investors
  understand, and seek out economies of
  scale. Properties with multiple units offer this
  advantage. This is in stark contrast to
  buying one single family home.

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Vacancy Cash Flow

• A single family residence can be a good
  investment. However, trying to manage a portfolio
  of single family rental homes can be a completely
  different story. What happens when you have a
  single unit income property that goes vacant? It
  starts costing you money every month!

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• Contrast this with holding a mobile home park
  with 10 or more lots and tenants. Even if 30 of
  those tenants leave or stop performing investors
  ought to still be generating a positive monthly
  income. The chances of 10 units in a mobile home
  park all going empty at the same time is far
  lower than a single family home going vacant at
  any time. This not only ensures positive returns,
  but consistency in cash flow month after month.

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ROI on Property Improvements

• The return on improvements for multitenant
  properties is far greater. An improvement to
  community property can raise the value and rent
  on all units. For example putting in a swimming
  pool can raise the value of 25 or more units in a
  mobile home park. Contrast that with spending
  almost as much to put in a pool for a single
  family home, or having to fork out for 25 pools
  for a whole portfolio of single family properties!

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Efficiency in Property Management

• The most obvious and significant benefit of scale
  that mobile home parks offer is when it comes to
  property management. Having multiple units on the
  same lot means dramatically slicing down the time
  and costs of property management. This applies to
  the number of team members and vendors you need
  to recruit and manage, and their workloads. This
  also rolls over to researching acquisitions,
  marketing for tenants, and screening tenants.
  With a mobile home park just one 15 sign can be
  used to market for multiple tenants repeatedly
  whenever there is an upcoming vacancy. To
  compare multiply the marketing and due diligence
  costs by each single family home that you own.

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Financing

• There are great advantages in economies of scale
  when it comes to financing too. Having 10 or more
  units on one property means fewer loans. Needing
  just 1 loan versus 10 can definitely reduce
  acquisition and operating costs. That increases
  your income and bottom line. Just as importantly
  is reduction in workload and risk. Managing ten
  sets of loan documents, property taxes, invoices,
  and insurances for just 10 units is much time
  intensive than one.

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Acquisition and Resale Efficiency Costs

• Being able to acquire 10, 20, or 100 units at a
  time dramatically increases efficiency when it
  comes to sourcing and acquiring investment
  properties. That also applies on the flip side
  when liquidating assets and restructuring
  portfolios. Do not underestimate the importance
  of this. In a recent radio address, speaking on
  his new book Money, Tony Robbins highlights the
  fact that fees make a massive difference in
  profits and wealth building. Even a 1 difference
  in costs can add up to being hundreds of
  thousands of dollars over the years. Seize the
  benefits of the economy of scale, and put them to
  work for you.

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