Mobile Home Park, Self Storage, Apartments Shootout
I'm just entering the field of real estate, I have the opportunity to buy:
11 space Mobile home park with land zoned for expansion, up to 36 spaces.
or:
15 unit self storage facility, comes with 3 acres of land zoned for expansion.
or:
5-plex in medium condition, will need work from time to time.
Ignoring price and cash flow, of the 3:
Which is the lowest maintenance?
Which is easiest to run from out of state?
I assume that self storage would be the easiest (the people just take their own key home, it is not attended)
I like the idea of a MHP, and it seems to me that it will be easier to maintain than apartments, but being a newbie, I have no idea of the real work to make things happen.
Someone who has some experience, what have you found?
Yes the self storage would be easiest, but being an absentee owner would you want someone to watch over your assets?
I prefer MH Parks because of the higher cap rates, but Apartments have less of a turnover and appreciate much better. As far as all three of your choices, I would pick the one that is going to make the most money and will have the highest resale value when I decide to sell. If you are a buy and hold type of person, you may want the apartments, since they will appreciate, and always be needed.
If you decide on the MHP then make sure you have double wide lots, or have a contingency plan to switch it to something else once it is paid off.
If you decide on the self storage then you definitely will want better insurance in case there is a fire, or theft, since no one is watching over it.
Just my 2 cents,
Kyle
Well if you were on-site the order would run like this:
easiest to maintain--- self storage
Next ----- mobile home park
Then--- apartment building.
But since you are planning to manage this from a disance I think I would reverse the order. It is much easier to find management companies to manage an apartment building than either other alternative.
I agree with Kyle. Go for the one which will make you the most money. You can always find a way to manage your property from out of state.
Charley
Thanks, that makes a lot of sense. Yes, the storage is small potatoes-- c. $500/month, park is not bad, $1700/month, and 5-plex is c. $2000/month. Therefore, the money left over after paying someone to manage it will make more sense for the 5-plex. Also, it will be a more valuable commodity in the future.
thanks for the suggestions,
dan
My opinion
1- Apartments (easy to find reasonably priced management, for around ~8% fee)
2- Storage - you need someone to do leases, deposits, lock up for night (or buy coded entry & foreclosures/sales of contents. A lot of work, that is why most storage places are large and have a full time employee, I've seen others get around this by having a mobile home on site and giving free room and board to a manager in exchange for limited managment services). Not sure if there are management companies that will do this. A lot of storage spaces have low occupency from competition, saturation, or bad locations.
3- MHP - Low class tenants harder to deal with, management companies usually won't touch them, downward trend.