Evaluating Mobile Home Park Investments - Why Warren Buffet
Invests In Mobile Home Park Communities
Mortgage interest rates are rising and single family homes are
more expensive than ever. The American dream is becoming more
like a fantasy to most average hard working Americans already
struggling to pay the rent.
Additionally, what is going to happen to countless families that
recently purchased their first home under those new adjustable
rate mortgage loans that take effect after a very short fixed
rate period? These people are going to have serious payment
shock when they realize the effect that two percentage points
has on a long term, several hundred thousand dollar mortgage.
Foreclosure numbers are going to skyrocket in this country. A
severely damaged credit score rating will drive these people
back to the rental market or into some type of "owner financed"
property.
A mobile home offers a solution to these families. Yet, because
of the negative stigma associated with mobile home parks, city
officials will generally do whatever it takes to prevent new
park developments. Couple this fact with the significant cash
requirements to build a mobile home park and you have a powerful
discrepancy between demand and supply. Savvy real estate
investors know this and are already profiting from our nation's
lack of affordable housing.
Still not sure if a mobile home park investment is a good idea?
Perhaps, this might change your mind. The king of Wall Street,
Warren Buffet recently invested 1.7 billion of Berkshire
Hathaway's capital by purchasing Clayton Homes Inc, one of the
largest manufactured housing companies in the world. This was
after an unsuccessful bid to buy a huge portfolio of delinquent
mobile home loans from Conseco Inc.
Typically, when Warren jumps, millions follow and bank on yearly
12% returns. However, this is a unique opportunity for investors
to gain huge profits from Buffets financial wisdom in the short
term. The "Oracle of Omaha" as always been know for buying
value, buckling down for the long haul and closing his position
decades later when he's squeezed every penny from each
respective stock. The beautiful thing about a mobile home park
investment is that (provided you know what you're doing) you
don't have to wait a decade to realize triple digit returns on
your money. Every day, mobile home park investors sell parks for
multiples of what they paid for them a few years prior. Corey
Donaldson, an experienced mobile home investor was recently able
to retire as he doubled his equity (1.2 million) with his Texas
mobile home park in just one year. Similar investors across the
globe are able to accomplish this seemingly impossible feat with
every park they purchase. These are generally deemed
"turnaround" mobile home parks, where the investor finds an
owner that has managed his/her park poorly over the years,
either out of apathy or ignorance. Once locking up the property
(many times with the previous owner carrying the mobile home
park loan) this knowledgeable mobile home investor makes the
sweeping changes necessary to increase net operating income.
However, you don't have to buy a poorly run park to realize
significant returns. Most of mobile home parks are between 15
and 30 acres. Historically, that land becomes so valuable that
over time those mobile homes are replaced by larger commercial,
retail or residential developments. However, unlike most land
investments that are considered sunken costs until someone sells
or builds, mobile home parks are producing large monthly cash
flows as you rent the dirt the mobile homes sit on. In other
words, you can profit by leasing the land to people as the value
of your land appreciates.