Don’t Overlook Mobile Home Parks




Ask most new investors what a typical real estate investment is and they’ll probably name single family residential at the top of the list. But single family is only one type of investing, and that’s the attraction of real estate investing – there are so many opportunities.

At a recent REIN Multi-Family & Commercial Investing Summit, attendees got to hear from multi-family investor Thomas Beyer, who has been investing since 1997 and a REIN member since 2000-2001. Beyer has built up a significant multi-family portfolio including mobile homes parks.

After a brief opening discussion about interest rates, Beyer then dove headfirst into his topic of mobile home park investing. “If you look around the world, what really goes up is not the asset sitting on land. What goes up in value is land… you want to own land. You want to own as much land as possible… it occurred to me many, many moons ago that really you want to buy just land and rent it out.”

Of course, the problem with buying pure land is that it doesn’t always cash flow, admitted Beyer. One could buy vacant land and rent it out as farmland but options are limited. “The next best option,” he continued, “is mobile home parks: you rent the land; you rent the pad to the tenant.”

Beyer compared this to a traditional multifamily building investment: “In a building, I rent the whole unit. Look at a building over 50 years and guess what… the building doesn’t get any better. It deteriorates. The roof starts leaking, the toilets start leaking, the carpets wear out. So you’ve got to constantly reinvest in any commercial or single family asset. It occurred to me far too late in my life, I should really buy more mobile home parks [because] you don’t own the home, you own the land, and you rent it to the tenant.“ (While some park owners own mobile home structures in “condominiumized” parks, it’s very rare, explained Beyer).

Next, Beyer gave attendees a brief overview of what a typical park might look like. “Trailers are about 14 – 15 feet wide and about 45 – 46 feet long. That’s about 600-700 square feet. They come in all shapes and sizes, there’s a yard, and you can park a car or two in the driveway. They rent for about $400 a month.” He later added that there were about 50 units on the property, although this varies.

While the tenant owns their own structure, the park investor owns everything else: “You own the entire park, which means roads, infrastructure, everything… except the home. The home is usually owned by the tenant,” Beyer explained.

Mobile Home Park Benefits – Why Invest In Mobile Home Parks?

There are many benefits to owning a mobile home park. “You have a much, much lower vacancy because the owner of the mobile home [considers his home one of] his most prized possessions. Plus, for the tenant, it has very low carrying cost, maybe 400 bucks a month, plus utilities; maybe 500 all in and he lives in this house and has lived there for 20 years and knows all those neighbors. If he doesn’t pay, you can evict him and take his house away. So you have extremely low vacancies.”

“You have much, much lower operating expenses because you don’t pay and fix up all the depreciating stuff which you would own say in an apartment building… that’s all on a tenant.”

A higher capitalization rate is another benefit, Beyer pointed out. “Capitalization rate is the income of the asset divided over the price. Apartment buildings today in any city in Canada are around 5%. And generally speaking, mobile home parks are sort of in the 6% to 7% range.”

Later in his presentation, he added, “The biggest factor impacting these potential cap rates you pay is the land development potential. So, if you look [at] Penticton park or parks in Calgary and Edmonton, those cap rates would be much, much lower because they assume you will eventually clear all the trailers out and build condos there or townhouses… So, really what you’re buying is land with income and with development potential.”

Mobile Home Parks – What Are The Challenges?

No investment is perfect and mobile home parks do come with some of their own challenges. “You pay more for loans,” explains Beyer. “There’s a stigma about mobile home parks… that they’re basically an undesirable asset. [As a result], some banks don’t lend at all and some banks lend but they sort of hold their nose and say, okay, I’ll give you some money but it’s going to be more expensive and guess what, we’re going to give you less as well.”

And in terms of risk, “the key risk is infrastructure risk,” explained Beyer, since the investor owns the land and everything other than the mobile homes themselves, including pipes, wires, and roads. Beyer described doing his due diligence on a park and hiring an engineer to go into the pipes with cameras and report on their condition.

How To Do Mobile Home Park Due Diligence

Beyer summarized the five areas that investors should look at when doing due diligence on a park: “Infrastructure, density, expenses, age of homes, and location”.

  • Infrastructure: In terms of infrastructure, investors should examine “water, sewer, electric, gas, and roads” as the key infrastructure components they can expect in each park.
  • Density: Investors should expect “roughly about seven units per acre,” although this number varies slightly.
  • Expenses: There are two types of expenses: “Upfront expenses to make the park operational… and ongoing expenses to keep the park going.”
  • Age of homes: The age of the mobile homes themselves should be a consideration. “Best [parks] are usually old, often have narrow pads, and they have often old, aging infrastructure but they have a great location, very desirable but they have a high price too.”
  • Location: Beyer advises looking at how close the park is to larger urban centers, and whether the town or city has grown around the park or is still separate from the park – both in terms of attracting tenants and the redevelopment potential in the future.


After a detailed discussion about due diligence, Beyer then spent time answering audience questions and helping them further understand the opportunity.

For investors who are looking to move beyond the single family residence investment and explore larger deals with more doors, Beyer’s suggestion is that land is the real opportunity, and mobile home parks provide a compelling investment with the potential for higher cash flows and lower expenses.




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