Park models are an increasingly popular housing option, especially for retirees looking for an affordable vacation or second home. But is investing in a park model a wise financial decision? There are several factors to consider when evaluating the pros and cons of park models as an investment opportunity. First, park models provide an affordable way to own a second home, with prices typically ranging from $50,000 to $150,000. The small footprint, usually 400 square feet or less, also makes them more budget-friendly to maintain. Park models can generate rental income if located in a high-demand area near amenities. However, there are also cons like lot rent fees, lack of appreciation over time, and difficulty securing financing. Maintenance costs can add up quickly for older models. Overall, park models can be a good investment if purchased at the right price point and location, but buyers should consider all factors carefully.
Park models provide an affordable vacation home option
One of the biggest advantages of park models is their relatively low cost compared to traditional site-built homes. The small size means they are much cheaper to manufacture and purchase. In many popular vacation destinations, park models can provide a budget-friendly way to own a second home. Their small footprint also means lower maintenance costs than a larger home. For retirees on a fixed income or families who can only getaway a few weeks a year, the lower price point of park models makes second homeownership attainable.
However, lot rent and lack of appreciation over time should be considered
While less expensive to buy initially, park models require ongoing lot rent payments to the mobile home park owner. These fees can range from a few hundred to over a thousand dollars per month. Lot rent is unlikely to decrease over time, and will likely increase. This reduces the appreciation potential of the home, since the land itself is not owned. Park models typically depreciate over time similar to RVs or mobile homes. The low cost to buy is offset by lot fees and lack of value gain.
Park model financing can be challenging but is possible
Since park models technically are classified as RVs in many states, it can be difficult to find traditional financing. Park models are considered personal property rather than real estate. Banks usually will not provide a standard mortgage, so buyers need to explore alternatives like personal loans, RV loans, or seller financing. While financing park models is not impossible, options are more limited so buyers need to research lenders and secure funding ahead of time.
Rental income potential in high-demand areas
In popular vacation destinations like Florida, Texas, Arizona, and California, park models can generate significant rental income due to high demand. Park models in resort communities, near theme parks, or close to attractions like beaches or lakes can rent for $100-$200 per night or more in peak seasons. Investors should carefully evaluate the local rental market potential before purchasing. Opting for a park model rental over a hotel room can save visitors money.
Maintenance costs may be high for older models
While cheaper to maintain than a full-sized home, maintenance costs can still add up quickly for older park models. Plumbing leaks, roof repairs, flooring replacement, andappliance issues pop up more frequently as park models age. Redecorating and renovations may be needed to keep rental units competitive. Investors should factor in higher ongoing maintenance fees and improvement costs for park models over 10-15 years old.
In summary, park models can represent a good investment opportunity if the location, price, financing, fees, rental potential, and maintenance costs align. Buyers should carefully weigh the pros and cons for their individual financial situation before purchasing a park model.