The real estate business industry is indeed quite big and has a lot of opportunities for a savvy entrepreneur or investor. The mobile home park business is one of them. Though the mobile home park business is capital intensive, it has highly profitable business opportunities.
Many investors prefer investing in the mobile home business and making a huge profit because it has low maintenance costs when compared to any general home rentals. Modern people are finding it convenient to live in mobile home park buildings.
Before you start your business plan, you need to understand this industry first. Discuss your strategy with experts in this area. They can help you to find the areas where you can get easy approval for mobile home parks. After you get the approval, you need to apply and obtain the license for the business.
Remember, if you want to build a parking building, you will require a professional team that will work for you to achieve your business goals. Your working team should include architects, engineer/ builder, other workers like plumber, etc.
But if you are planning to buy a mobile home park which is on sale, you will only need to do a makeover to attract the tenants. And in that case, too, you would require a team that would work with you and achieves your business goals.
Before you start working on your business plan, you need to look into some of the essential facts:
Industrial Overview of Mobile Home Park Business
The studies have proved that from the past few years, this industry has slowly recovered from the recession. During the recession, high unemployment and tight credit market reduced the demand for land leasing. Later, the poverty rate and shattered housing market eventually started the demand for land leasing, and industry started the recovery phase. Experts believe that in the years to come, this industry may experience expansion.
If we look into the barriers to enter this industry, it differs from one place to another. Barriers for entry depends on different cities and states due to zoning regulation. This industry has moderate barriers across the United States. Indeed, it is a capital intensive industry, and it is expensive to buy land space and build a mobile home park business. But the cost can also depend on the location of the property. The expenses may vary depending on the infrastructure and the facilities the owners want to provide to their tenets.
Level of Competition in Mobile Home Park Business
There are no significant barriers to the new competition in this industry. In most of the areas in the country, it is hard to get proper zoning, acquiring necessary permits, and license. Remember, it is not easy to build new mobile home parks. Thus, it is less competitive for investors who are currently investing in building mobile home parks everywhere.
This business provides high returns to the investors than the typical home renting due to the reduced costs. Mobile home park business owners are only likely to manage the land associated facilities. They do not incur any maintenance costs such as painting, new appliances, or any other amenities inside the home. To stay ahead of the competition, you need to provide something more than what your peers are providing.
Market survey is quite essential in the mobile home park business. You need to collect lots of information through research and then collate it to get the overall picture. The information includes how this business industry work, finance you will need to start this business, experts in this field, and lot more.
It is important to know your target market before you invest in this business. Research your target market, work, and concentrate on your target market to make money and reinvest returns. Try and understand the problem statement first before you delve deep into finding a solution to the problem with your new business strategy.
Challenges and Threats
The real estate industry is where most of the entrepreneurs are want to do their deals. It is what makes this industry more competitive and interesting. It is very challenging to start your firm. Many smart professionals eagerly want to make their deals and be a part of the industry. The following can be the challenges in the mobile home park business:
- Financing and getting investors to fund your business is a big issue as the market is already filled with small to big players.
- There are unlimited investment choices. Whether you want to go solo or wish to take people on board might be a tough call.
- It might take up a lot of your time and, you might even end up spending full time on the business. It could be a good idea in case you are planning to work on the business proposal full-time.
- It is difficult to invest in a down market.
- It is hard to be patient enough through the best course of action. It might take a while for a mobile park business to generate revenue before you start seeing it.
Legal Entity and Insurance Policies
You can build your home in your name and start from there, but what if you have finance failure? So, it is advisable to start a business after proper planning. Most of the mobile home park business is set up as LLC’s (Limited Liability Company). This option enables the owner to legally separate themselves from the liability to protect personal property and finance in case of failure.
It is easy to create an LLC. All you have to do is file an article of business incorporation with state agencies and maintain a good standing business. Seek the advice of the real estate attorney if necessary. They will have experience in any matter of real estate and will be able to guide you through the process. For any business, it is a good idea to talk to people in the field before taking any kind of action.
LLCs enjoy greater flexibility compared to the corporation or partnership. LLCs offer more benefits relative to other entities. In many states, LLCs may pay lower registration and maintenance fees compared to a corporation. Also, keep in mind LLCs offer more flexibility in the distribution of profits, as per the LLCs operating agreement.
As a mobile home park owner, your insurance needs are similar to the landlords. Tenets must insure their home and belongings, but as an owner, it is your responsibility to cover common areas, utility service lines, landscaping, and others as it is a part of the mobile home park.
It is important to know that as a mobile home park owner, you are in a unique position when it comes to insurance coverage. Most of the insurance companies will not be willing to take the responsibilities of insuring mobile home park business.
However, there are specific insurance companies that specialized in this type of coverage and, you can approach them for insuring your business and the livelihood of people associated with it. Some of the insurance you may need includes General Liability Insurance, Workers Compensation Insurance, Directors and Officers Liability Insurance, Auto Liability Insurance and, Employee Practices Liability Insurance.
Financing Your Business
We all know every business needs funds to get started. If you have already made savings and kept aside for your business, then it is a great idea and, you can start right away. But if you do not, then you may take a loan from the bank or financial institution. You may need to provide some bank collateral to get finance depending on the bank. However, some banks may not ask for any collateral. To raise funds for your business, you need to be a strong borrower.
It is important to have the sizable down payment and shy away from big banks. And always think outside the box. Or, if you are looking for individual investors of businessmen for partnership, it could be an easy way to get funds for your business. In this case, you must have your business idea well-organized to be able to pitch to the investors and impress them.
Only when the investors see value in your proposal, scope in your business and sometimes even traction in their growth, will they be willing to invest. Understand what each investor is looking for and try to pitch accordingly to draw their attention.
Selecting a Suitable Location
Choosing a suitable space where you want to locate your business is the fundamental step in starting this business. You can ask the retailer to look for a suitable location for your business. Keep in mind the following factors while selecting a location for your business, the topography, accessibility, competition nearby and all additional facilities available, such as water, sewage, and utilities
Marketing Plan and Strategies
The real estate industry is a game of numbers. The bigger number of house units you can produce, the more profits you can make. It is also important to know, not everyone gets the same results. Results can differ for everyone according to their respective marketing campaign.
There can be two investors in the market who could be doing the same and get different results. And two investors in the market who could be doing different and get similar results. The real estate industry works in this way. Marketing strategies can include advertisements in the newspapers, direct mailing prospective customers, or the traditional form of advertising, cold calling, digital advertising, and social media marketing.
Staying ahead in the competition
Most of the people blame the industry and competition in the industry if they are not claiming the results like others. But if you are well-equipped with resources and planning, the right education, you can win in any business. The key to understanding the industry is to know who your competitors are.
Find out and understand what is your competitors are doing and what is making them win or lose clients. It is not true that, just because there is a huge competition, they won’t have weaknesses in the big players of the market.
There may be people who dislike doing business with them, if you want to be the best among your competition, find a workforce made up of the best individuals in the industry. Learn good things about the industry from your competitors and also learn from their mistakes, ensuring that you do not make the same in your journey.
Creating corporate identity and brand awareness
Brand awareness in the mobile home park simply means your local retailers and individual who needs your service know who you are. It also means you are on top of their mind if they are looking for any mobile home. Most people look online for their home search. It is important to create brand awareness with digital advertising.
Many companies spend their precious time and money in creating a corporate identity. It sometimes works and sometimes fails. You need to keep in mind some of the points to create brand awareness:
- It is a service
- Your face can be your brand
- You know where your potential customers
- You are an expert in the market
Once you have all this ready, the business space, the assets, the team of professionals, your supply chain is complete. Now, with proper branding and marketing, you can start developing the demand side of things as well. When the supply meets the demand, you are up and running. It is time for you to make money.
However, be careful of each step you take while starting your business. From selecting the location to marketing the mobile home parks, everything needs to be done accurately.