Mobile home parks, are a great, real estate investment, because of their low maintenance, high returns and overall affordability. There’s a strong argument for, investing in mobile home parks. Listen to this interview with Jefferson Lilly, mobile home park, investment expert and educator and learn why and how you should be investing in one of the, real estate industry’s hidden gems.
Jefferson Lilly is the founder of Park Avenue Partners, a private equity real estate fund that acquires and operates, mobile home parks, nationwide. His investment funds are currently returning 8% – 15% cash annually to Limited Partners. Both personally and through his partnerships, Jefferson has acquired 25, mobile home parks, in 13 states since 2007 totaling over $56mm in value.
He also started the industry’s first, mobile home park podcast, and the largest group on LinkedIn dedicated to, investing in mobile home parks. Jefferson has been featured in The New York Times, Bloomberg Magazine, and on the Real Money television show. He holds a B.A. from the University of Pennsylvania and an MBA from the Wharton School of Business.
Listen to the full interview here:
Warren Buffett advises that we should stay within our circle of competence, so I figured that I had always lived in a house or apartment so that was within my circle of competence. I started looking for traditional apartment buildings; but kind of stumbled into, mobile home parks,. I began researching it, in then realized why, mobile home parks, was really the best niche in, real estate.
How to Get Started investing in, Mobile Home Parks,
I started out by buying my first, mobile home park, it was a little under $500,000. I put down a little less than $100,000 and I borrowed almost $400,000 from a bank. I still had some other reserves and I still had my day job. Just to be clear, at no point you can say like hey, mobile home park, next stop actions is silicon valley. I was looking for passive income so, I had two streams of income the, mobile home park, and my regular W2 income for about a year. It’s now just coming up on 12 years later and I haven’t looked back.
The first, mobile home park, I purchased, I just bought the land, I didn’t actually buy any of the homes at that time. My tenants owned all the, mobile homes. There were about 45, mobile homes, in the park. I purchased the land and the, mobile home, owners paid me rent to park their homes in the park. Think of it as a parking lot. You own the lot, not the cars parked on the lot. The cars pay you to park there. Same concept in a, mobile home park.
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Investing in, mobile home parks, instead of mobile homes
Then about 5 years ago, I formed my first partnership to start acquiring, mobile home parks, Nationwide. Now sometimes I buy, mobile home parks, with the homes as well as the lot.
We call those a horizontal apartment building of sort, our colloquial term for that. Most of the, mobile home parks, the owner of the park does not own the, mobile homes, and the owner is paying rent to the park owner.
Whenever we buy a, mobile home park, with the homes, we tell the tenants, hey you can now own your own house for the same monthly payment as renting. Depending on the value of the house they can own after about thirty six months or less then 60 months. When they become homeowners they have to actually maintain the houses. It’s just like real home ownership, they’ve got to put on big-boy pants, there now a homeowner. So when that proverbial toilet leaks, they don’t call me. They have to go to Lowe’s or Home Depot and spend $12 for the part instead of the $200.00 it would cost me to send in a plumber to fix.
The optimal way to own these, mobile home parks is to not own the home but just home the park. You don’t want to be responsible for fixing leaky toilets and such.
If you don’t have the money to buy, mobile home parks, for $500,000 as most of you will not, then buying individual homes and fixing them up or something and selling them or even renting them would be a good start. I know one gentleman who started with just a couple thousand dollars and now owns over 50 mobile homes.
How to talk to the owner of the, mobile home park, to get a deal
If you don’t have a lot of money to start, investing in mobile home parks, what you can do is you can go to a, mobile home park, owner and say. Hey do you have any individual, mobile homes, in your park that are just sitting there vacant? Maybe they need some renovation so you you can hopefully find a win-win scenario.
That Park owner may even give you the house for free or maybe just for a couple thousand dollars. You then put some sweat equity into it. You paint, put in new flooring etc. Your agreement with the park owner is that maybe you’ve got a couple months to get the house fixed up. Hopefully you can do it in one month and then indeed you’ll begin paying the lot rent. Because that house is just sitting there un-renovated and obviously the, mobile home park, owner is getting no cash flow off it because it’s sitting there vacant.
So you get a month or two abated lot rent, you fix up the house and then rent it or sell it. You might then get an extra two to three four hundred dollars a month for the house depending on the market. You put that additional money in your pocket, and that is how you get started.
The average income of a, mobile home, owner is around $35,000 annually. That’s about three thousand a month. So their housing budget is around a thousand dollars a month. Most folks that make thirty five thousand a year aren’t going to be able to save up twenty thousand for a down payment on a single family home, so that is the target market for the mobile home buyer. Our, mobile home, a 3 bedroom, 2 bath rents for about $800.00 per month. We offer a rent to own package and in 3 to 5 years, they can own their own home. Beats a 30 year mortgage any day.
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If you visit my website https://parkstreetpartners.com , on the homepage you’ll see our phone number and information on our, mobile home parks, nationwide. There is also information on investing in our private equity fund. You can also email us at Park Avenue partners. com. You will find other information on the web site as well. Articles and webinars on investing in, mobile home parks, on the upper right corner of that web page they’ll see a button that simply says “Invest” they will find and again they can find summary information on the fund and also the PPM, the private placement memorandum which is a very long and dry legal agreement.
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My interest was peaked after interviewing several mobile home park investors on The BiggerPockets Podcast, and later finding The Mobile Home Park Investing Podcast, hosted by Kevin Bupp and Charles Dehart of Mobile Home Park Academy. I realized that mobile home park investors were crushing it right now.