The Better Bet: Why Investors are Choosing Mobile Home Parks Over Apartments

In the world of commercial real estate, multi-family apartments have long been considered the “gold standard” for cash flow and stability. However, a growing number of sophisticated investors are shifting their focus toward an asset class that was once overlooked: Mobile Home Parks (MHPs).

While both fall under the umbrella of residential real estate, the underlying business models are vastly different. If you are weighing whether to buy a 50-unit apartment building or a 50-lot mobile home park, here is why the park often comes out on top.

1. Lower Operating Expense Ratios

The most immediate difference you will notice on a Profit & Loss statement is the expense ratio. In a traditional apartment complex, the owner is responsible for everything inside and outside the units—leaky faucets, broken HVAC systems, peeling paint, and worn-out carpets. These “vertical” maintenance costs typically eat up 50% to 60% of gross income.

In contrast, a Mobile Home Park that operates on a Tenant-Owned Home (TOH) model only requires the owner to maintain the “horizontal” infrastructure (roads, utility lines, and common areas). Because the tenants own the structures, the expense ratio for a well-run MHP is often as low as 30% to 40%.

“In an apartment, you’re in the property management business. In a mobile home park, you’re in the infrastructure business.”

2. Unmatched Tenant Retention (The “Stickiness” Factor)

Apartment turnover is a constant battle. The average apartment tenant stays for 12 to 24 months. Every time a tenant leaves, the owner faces “turnover costs”—cleaning, repairs, and marketing—which can easily cost thousands of dollars per unit.

In a mobile home park, the tenant owns their home. Moving a manufactured home is a massive undertaking that can cost $5,000 to $10,000. Because of this high cost of relocation, mobile home park tenants are incredibly stable. It is not uncommon for residents to stay in the same park for 10, 20, or even 30 years. This “stickiness” creates a predictable and reliable cash flow that apartments simply cannot match.

3. The Supply and Demand Imbalance

You can build a new apartment complex almost anywhere that zoning allows, and developers are doing so at a rapid pace. This can lead to oversupply and downward pressure on rents.

Mobile home parks, however, are a shrinking asset class. Most municipalities have effectively banned the development of new parks through restrictive zoning. At the same time, existing parks are occasionally being redeveloped into “higher and better” uses like retail centers or luxury condos. This decreasing supply, coupled with a surging demand for affordable housing, gives MHP owners incredible pricing power and a natural “moat” around their investment.

4. Accelerated Depreciation and Tax Efficiency

Both asset classes offer tax benefits, but MHPs often provide a faster return on capital through accelerated depreciation.

•Apartments: The structure is depreciated over 27.5 years.

•MHPs: A large portion of the value is in “land improvements” (roads, fences, utility lines, pads). These components can often be depreciated over just 15 years.

Through cost segregation studies, MHP owners can front-load their depreciation, significantly reducing their taxable income in the early years of the investment.

5. Lower Competition and Consolidation Opportunities

The multi-family market is highly efficient and crowded with institutional buyers, REITs, and thousands of individual investors. This competition has compressed “Cap Rates,” making it harder to find deals with significant upside.

O MHP industry remains highly fragmented. A vast majority of parks are still owned by “Mom and Pop” operators who may not be managing the property to its full potential. This creates a massive opportunity for professional investors to acquire parks, improve operations, and “force” appreciation in a way that is increasingly difficult in the saturated apartment market.

Comparison Summary

Feature	Apartamentos multifamiliares	Mobile Home Parks (TOH)
Expense Ratio	50% – 60%	30% – 40%
Maintenance	High (Interior & Exterior)	Low (Infrastructure Only)
Tenant Turnover	High (Every 1-2 years)	Extremely Low (Decades)
New Supply	High (Active Development)	Very Low (Effectively Banned)
Depreciation	27.5 Years (Standard)	15 Years (Land Improvements)

Conclusão

While apartments will always have a place in a diversified portfolio, Mobile Home Parks offer a unique combination of lower risk, higher margins, and greater stability. By focusing on the land and infrastructure rather than the structures themselves, MHP investors can enjoy the benefits of residential real estate without the headaches of traditional property management.

If you are looking for a recession-resistant asset with a built-in competitive advantage, it might be time to look past the apartment complex and toward the park.