Do you want to start a mobile home park business? If YES, here is a complete guide to starting a mobile home park business with NO money and no experience.
Okay, so we have provided you an in-depth sample mobile home park business plan template. We also took it further by analyzing and drafting a sample mobile home park marketing plan backed up by actionable guerrilla marketing ideas for mobile home park businesses. In this article, we will be considering all the requirements for starting a mobile home park business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Mobile Home Park Business?
The real estate industry is a very big industry that can accommodate loads of entrepreneurs who are extremely focused about making millions from the lucrative industry. This industry has a lot of business opportunities and one of such business opportunities is the mobile home park building business. Indeed this business is capital intensive but it rewards a million folds.
In our modern world, individuals now find it convenient to live in mobile home park buildings, and also investors make more profit by constructing mobile home parks just because of its low maintenance cost especially when compared to normal home rental.
For you to start this type of business, you need to understand the industry and you are expected to discuss your plans with the secretary of planning in your area to know the areas that you can easily get approval for. Apart from getting this approval, you also need to apply and obtain your mobile home park business license.
You should also have it in mind that you will need a team of professionals to work with you if you plan to achieve your business goals. We believe you will need an architect, surveyor, structural engineer/builder and other artisans like a plumber, who will help you deliver your mobile home. But if you choose to buy over an existing mobile home that is put up for sale, you will only need to makeover the mobile home for it to attract tenants at a good price.
Starting a Mobile Home Park Business – A Complete Guide
- Industry Overview
Businesses in this promising industry act as lessors of real estate that does not include permanent buildings; such real estate includes manufactured home (i.e. mobile home) sites, vacant lots and grazing land. It is important to state that manufactured and mobile home sites are residential developments for the placement of detached and single-family manufactured homes that are produced off-site. They are then installed within the community on a residential site that is leased by the homeowner.
This industry over the past five years has gradually recovered from recession. Though high unemployment and a tight credit market reduced demand for land leasing in the aftermath of the recession, an increase in the poverty rate and a devastated housing market eventually drove demand for land leasing from manufactured home owners, putting the industry on a path to recovery.
Experts believe that over the next five years, that the industry will experience an expansion in the retired population, a major industry market which will grow demand for leased land. Reports have also stated that the recovery in the traditional housing market will temper the industry’s growth prospects.
We will like to state that the barriers to entry for new businesses in this industry differ between states and cities due to zoning regulations, but experts believe that the barriers to entry are moderate across the United States. Indeed it can also be expensive to buy suitable land to begin this business, but it is believed that this is solely dependent on the location of the property. We also believe that cost can also be dependent on the size of the land, as well as what infrastructure and facilities the potential owner wants to provide to the site occupants.
Starting a Mobile Home Park Business – Market Feasibility and Research
- Demographics and Psychographics
It is important to note that market survey is very crucial in the mobile home park building business. Have it in mind that there are loads of information that can be gotten from research, information like how this industry started, experts in the field, how much you can start this business with, and a whole lot more. But before you decide on buying properties in any target market, make sure that you follow the steps below.
- Understanding What Your Objective Is
- Research your target market
- Select a Target Market to Concentrate On
- Work your target market
- Make money and reinvest the profits
List of Niche ideas in the Mobile Home Park Business
It is important to state that real estate investing as a broad term is made up of everything from single or multi-family residential all the way through commercial high-rise office spaces. Included somewhere in the middle is a lesser-known niche focus of mobile home investing.
Often overlooked by many real estate investors, mobile home park ownership is simply another investment vehicle provided by real estate ownership. Mobile home Park Business has no unique niche ideas but the form of ownership and target market can serve as a niche in this business.
In the mobile home park business, one form of ownership involves the investor owning the lots underneath the individual homes, and the land surrounding the lots such as the streets, utility systems, club houses, swimming pools and other amenities.
It is believed that in this form of ownership, the tenant owns their home and pays only for the right to occupy the land where their home is located plus the use of the facilities. Another type of mobile home ownership involves the investor owning not simply the land, but also the actual homes. Here the tenants on the homes are paying for both the use of the land in addition to renting the home – similar to renting an apartment unit.
Level of Competition in the Mobile Home Park Business
It is pertinent to state that in the industry, there are no significant barriers to entry for competitors who decide to develop a new mobile home park from the ground up. In most areas of the country, it is very hard to obtain the proper zoning, getting the necessary permits or licenses, and deal with other regulatory prerequisites.
Also coupled with the legal restrictions, mobile home park developers do not break even or generate cash flow until a substantial amount of the home lots in the park are rented. You should know that new mobile home parks are not easy to build and provide for less competition if investors are currently involved with mobile home investing elsewhere.
Businesses in this industry typically delivers higher cash-on-cash returns than the typical multi-family investment. We believe this is because of reduced costs. Instead of maintaining the physical mobile home, the park owners are only managing the land and associated facilities including keeping the grounds clean, making sure that the roads are maintained and providing for any amenities that are expected in the given area. If we look very well, we will notice that these mobile home park owners are not incurring any costs like painting, new carpets, new appliances, or any other amenities inside the home itself.
List of Well Known Mobile Home Park Companies
Becoming a well-known brand has to do with a lot of factors, and even though the industry is fragmented there are mobile home parks that are standing out due to their activities in the industry such as their marketing and publicity strategies, how long they have been in the business, and what services they offer to their customers.
Therefore, below are some of the most popular mobile home park companies in the United States of America;
- Equity Lifestyle Properties
- Sun Communities, LLC
- Yes! Communities
- MHP Funds
- Hometown America
- Carefree Communities
- Lautrec, LTD
- Kingsley Living
- Continental Communities
- Zeman Homes
- Kort and Scott Group
- Harmony Communities
- Heritage Financial Group
- Inspire Communities
- Nodel Parks
It has been proven that mobile home parks are typically chosen by families as a better alternative for affordable living. A lot of families living in mobile home parks feel they are better alternatives to low rent apartment living. This is because low rent apartments can have high crime rates, constant noise on all sides of the building, no outside space, the inability to have pets and no sense of community.
When you compare those facts with a mobile home park that gives residents a chance to have privacy, a small yard with pets, space for their children and a neighbourhood feel, all for the same price, you will find that mobile home parks are better options. It is also good to state that the mobile home park can be an excellent investment vehicle when channeled toward providing affordable housing.
Also we believe that no matter the cycle of the economy, there will always be a market and need for affordable housing options. Presently there are over 60 million people earning a household income under $20,000, and based on the government’s suggested ratio of income to housing costs, this substantial group of people can only afford to pay an estimated $500 per month on housing.
When searching for options for this market at that rate, they are left with a choice between a low rent apartment complex and a mobile home park. We will also like to state that one misconception about mobile home park ownership is the thought that there is not as much tenant consistency when compared to a traditional multi-family property.
But first the use of the term mobile home is inappropriately categorized and instead is better understood as a manufactured home. This is because these houses are not mobile in the sense of easily movable, but rather are built in a factory and then transported to the chosen site. Concrete research in the industry has also shown that a clear majority of mobile homes are in the same location today as they were when they were first delivered.
Starting your mobile home park business from the scratch or buying a franchise
In the industry, constructing single unit houses and small single family homes are the most common thing for new entrants. This is why we believe it is a good idea to buy into a franchise, partner with a wealthier individual or to secure more financing in order to manufacture bigger housing units. It doesn’t call for you to start unachievable goals, but beware that properties requiring small initial investments often offer small profit potential.
Possible Challenges and Threats of Starting a Mobile Home Park Business
We all know that the general real estate industry is an entrepreneurial business where almost everyone wants to do their own deals. This is one of the many reasons why it still remains competitive and interesting. There are a lot of really smart professionals out there eager to do their own deals, however starting your own firm is incredibly challenging. Challenges of starting your mobile home park may include;
- Capital and funding
- Investors have unlimited investment choices
- The opportunity cost of leaving your job is higher in a hot market
- Hard to efficiently sift through all the over-priced deals
- Unlikely to experience a near-term capital event
- Hard to be patient even though that may be the best course of action
- Also tough to start an investment firm in a down market
Starting a Mobile Home Park Business – Legal Aspect
- Best legal entity for a mobile home park business
Indeed you can manufacture housing units in your name and go from there, but that is just asking for financial failure! It is advisable that you create your business as a business. There are many legal options available based on the tax status you are willing to accept – but generally, most real estate businesses are setup as LLCs. This option gives the owners the chance to legally separate themselves from liability in order to protect personal property and finances in the event of a catastrophic failure (such as a lawsuit).
It is relatively easy to create an LLC; the only two main requirements are filing articles of incorporation with state agencies and maintaining a business of “good standing.” When setting up an LLC, you need to seek the advice of a real estate attorney who is experienced with real estate matters. LLCs offer numerous other general benefits relative to other entities that aren’t necessarily unique.
Also it is important to state that when delegating management responsibilities, LLCs enjoy much greater flexibility than either a corporation or partnership. It can be agreed that corporations are statutorily needed to have officers and directors.
In the many states that impose increased fees based on the authorized number of shares, LLCs may pay lower state registration and maintenance fees than corporations. You should also know that LLCs gives you the advantage of the huge flexibility in the distribution of profits, as determined by the LLC’s operating agreement. Cash flow distributions do not have to be pro rata according to ownership like an S corporation, which gives the owners the ability to financially reward the “sweat equity” effort of select members through appropriate distributions of available cash flow.
Catchy Business Names for a Mobile House Park
- Liberty Park
- Golden fountain
- Mantra Park
- Formula housing
- Four Leaf Frontier
- Powerbod Park
- Sormeco buildings
- Destiny Realty Solutions
- Vitagee estates
- Universal park
- Wealth park
- Target heaven
- Sheraton Ltd
- Dream Home park
- Castle gate
- Affinity Investment Group
As a mobile home park owner, you rent land to owners of manufactured homes, mobile homes or traditional trailers, which simply means that your insurance needs are similar to those of a landlord. Yes the tenants must insure their own homes and belongings, but as the owner you are responsible for covering common areas, utility service lines and even the landscaping as it is part of what makes the mobile home park a desirable place to live.
It is important to state that as a mobile home park owner, you are in a rather unique position when it comes to insurance coverage. Note that a lot of insurance companies will not want to take on the responsibilities of insuring a mobile home park, but there are companies that specialize in exactly this sort of coverage. They put together packages that address the exposures and needs of mobile home park owners and even assist owners with risk management and safety protocols. Insurance you will need may include;
- General Liability Insurance
- Auto liability insurance
- Workers compensation insurance
- Employee practices liability insurance
- Directors and officers liability insurance
Intellectual Property Protection
Just as your about to start your business, you should also start thinking about intellectual property protection. You need to start keeping a conscious eye on these assets that are critical part of your business’s success. A lot of business owners mistakenly believe that a company name is synonymous with a trademark.
A trade name is the legal name of a business entity, which appears on the articles of incorporation or bylaws filed with a secretary of state’s office. The U.S. Patent and Trademark Office website allows viewers to search for existing trademarks.
A clear search, however, doesn’t necessarily mean that the desired name is available. As trademark rights are acquired through use of the mark, companies should consider conducting a comprehensive trademark search in order to uncover not only marks filed with the USPTO but any uses of the mark.
It is very much crucial for you to have a strong Internet presence to promote your business. We advise that after securing your domain name of choice, you should consider acquiring domain names with alternative extensions (.com, .NET, .biz, .us, etc.) as a defensive measure to prevent others from doing so. Also depending on your business budget, it is also advisable to register hyphenated versions of the domain name, common typos or even “(insert business name).”
Professional Certification Needed to Run a Mobile Home Park Business
- The Certified Commercial Investment Member (CCIM)
- Mobile Home Foundation Certification
- Certified International Property Specialist / CIPS
- Certified Property Manager® / CPM®
- Certified Residential Specialist / CRS
- Counsellor of Real Estate™ / CRE™
- Certified Real Estate Team Specialist / C-RETS
- Certified Park and Recreation Professional
Legal Documents Needed for a Mobile Home Park Business
- Bargain and Sale Deed
- Contract for Deed
- Grant Deed
- Mortgage Deed
- Quit Claim Deed
- Special Warranty Deed
- Transfer on Death Deed
- Warranty Deed
- Intent to Purchase Real Estate
- Moving Contract
- Property Agreement
- Property Manager Agreement
Financing your Mobile Home Park
It is important to note that you will need some funds to start your business with. But if you already have savings that have been put aside for this business, then that is fine. But if you do not, then you may consider seeking for a loan from a bank or a micro finance bank.
Though some of these banks may need you to provide collateral, but others may not ask for collateral. You can also seek start up grants to run your business. For you to raise fund for your business, consider the following;
- Have a sizable down payment
- Be a strong borrower
- Shy away from big banks
- Ask for owners financing
- Think outside the box
Choosing a Suitable Location for your Mobile Home Park Business
In this lucrative business, you will need to locate the space that you want to use for your business, which is the very first thing when starting your business process. We advise that you tell your realtor about the type of business that you want to start and thereafter allow him to search and notify you when he gets one. Things to consider when choosing your mobile home park location;
- The neighbourly approach
- City zoning
- Restrictive covenants
- Water, sewage and utilities
- Planned subdivisions
Starting a Mobile Home Park Business – Technical and Manpower Requirements
We all know the aphorism that says that no man is an island, which is why you should note that you might not be able to do all that concerns your mobile home park building business alone. This is why you need to assemble some team of experts in the field to build your mobile home.
Have it in mind that this team must have vast experience so as to help build your business well. When setting up your property investment business, you may be tempted to forgo as much as possible to reap the lion’s share of the profits for yourself. However, it is not a good idea to go it alone. This business and its decisions can be very challenging.
The Service Process Involved in Running a Mobile Home Park Business
A mobile home park is built entirely inside a huge, climate-controlled factory by a team of craftsmen. The very first step in the process is the flooring which is built in sections; each is attached to a permanent chassis with its own wheels and secured for transport upon the home’s completion.
Depending on the size of the house and the floorplan’s layout, there may be two, three or even four sections. These flooring sections have heating, electrical and plumbing connections pre-installed before they are finished with laminate, tile or hardwood.
Then after the flooring stage, the walls are constructed on a flat level surface with insulation and interior Sheetrock before being carried by crane into position and secured to the floor sections. After it has been secured, the interior ceilings and roof struts are next, vapour sealed and secured to each section’s wall frame before being shingled. When all these have been fixed, the exterior siding is added, along with the installation of doors and windows.
Then the interior finishing, such as sealing the drywall, is completed, along with fixture installation and finishing the electrical and plumbing connections. We believe that the exposed portions of each section, where they will eventually be joined together, are wrapped in plastic to protect them for transport.
During the construction of the housing units, the building site prep work must have been completed; the building will be delivered by trucks towing the individual sections on their permanent chassis. When they get to the site, the individual sections are then joined together securely, and all final plumbing and electrical connections are made before a decorative skirt or facade is applied to the bottom exterior of the house, hiding the chassis and finishing off the look of the home.
Starting a Mobile Home Park Business – The Marketing Plan
- Marketing strategies for a mobile home park business
We all know that the general real estate industry is a numbers game. The more number of housing units you can produce and mount, the bigger your profits and investment. You should also note is that everyone will face different results with their respective marketing campaign.
We believe that two different people in the same market could be doing the same exact thing and get very different results. And two different individuals, in two different markets can get similar results. That is how the general real estate industry works. Marketing strategies may include;
- Apparel/Human Advertising
- Direct Mail
- Cold Calling
- Bandit Signs
- Newspaper/Yellow Page Ads
Winning Competitors in the Mobile Home Park Business
Most people state many excuses for not getting started in Mobile home Park Business or not going bigger and claiming the results others are. They tend to blame it on the industry or rather the industry competition. Either they are too well funded, too well established, well connected or just have better businesses.
But we will like to tell you that if you are equipped with the right education, workforce and planning, you can compete and win in any business environment whether it is against real estate agents, giant private equity firms or another investment company trying to push you aside.
The very first key is to understand what the industry is all about and who your competitors are. Just because there is bigger competition doesn’t mean they don’t have weaknesses. Indeed there are people out there who are unhappy or dislike doing business with them.
You also need to find out what is it that your competitors are doing or not doing that is helping them win or lose clients. We also suggest that you take your time to find or assemble an indestructible workforce made up of the best individuals in the industry. Dream big and always move to achieve them.
Strategies to Boost your Mobile Home Park Brand Awareness and Creating a Corporate identity
Have it mind that brand awareness in this line of business simply means that your local Realtors or individual who need your services know who you are. Having brand awareness also means that you are top of mind when they think of a mobile home park.
And since most people start their home search online, building brand awareness with digital advertising is the best deal for your marketing buck. Note that a lot of companies have to spend serious time, money and effort creating a brand — a corporate ‘personality’ that conveys its essence. It sometimes works and sometimes it falls flat. Note the few points below if you want to establish a solid brand awareness on the general real estate industry;
- Your face can be your brand
- You are a storyteller
- Your business is a service
- Your an expert
- You know where your customers are