Small Parks (and Why I Love Them)
Economies of scale dominate real estate investment logic: Larger properties enable concentrated capital deployment and streamlined management. But this is common knowledge, making competition for big properties fierce. Meanwhile, smaller properties—often overlooked—offer unique advantages. Large institutional lenders may set minimum loan amounts that exclude smaller deals, but financing is still available from alternative sources. While large properties have their merits, small parks hold significant value, especially for investors starting out in real estate.
With all of that in mind, here are three key reasons I love smaller parks for their unique investment potential.
- Less competition
Perhaps the biggest advantage of a small property is simply that fewer investors are able to purchase them – if you’re managing a multistate portfolio, trying to pick up small properties just isn't feasible. Most “out of town” investors won’t even look at the listing for small property, which excludes them from the potential buyer pool and, as a result, lowers the price. Additionally, small parks tend to linger on the market, increasing time-on-market pressure that can lead to price reductions or sellers accepting below-asking offers.
- Different, but not worse, financing
Institutional lenders may bypass small deals, but regional and local banks eagerly finance these projects – especially since they can’t compete with larger lenders’ rates or terms on big properties. Working with smaller lenders requires the effort and legwork of building relationships, explaining your business plan, and establishing trust, but the payoff is significant. Once that relationship is established, these banks can become valuable partners for investors willing to invest the time upfront.
- Aggregation means greater value
A single small park may pose management or financing challenges, but aggregating multiple parks in one area is a viable strategy to build a robust portfolio. In fact, acquiring several small parks at favorable prices and then consolidating them into a single “large” asset for sale or refinancing can be more profitable than purchasing a large property outright. This approach often yields a higher number of units at a lower cost per unit.
Small parks are compelling investment vehicles, often outperforming larger properties in key ways. They’re an ideal option for real estate investors of all experience levels to consider.