1. Vertical Buildings vs. 15-Year Land Improvements
In apartments, the building depreciates on a 27.5-year straight-line schedule and land cannot be depreciated at all. In a mobile home park, a large percentage of the purchase price is allocated to 15-year land improvements:
- Asphalt roads, concrete curbs, and resident parking pads.
- Underground water distribution pipes and sewer mains.
- Electrical pedestals, transformers, and streetlight poles.
- Stormwater retention ponds, perimeter fencing, and entrance signage.
2. Accelerated Cash Flow Sheltering
An engineered cost segregation study accelerates depreciation on those 15-year assets into early ownership years, generating non-cash paper losses that shelter operating cash flow and other passive income.
Key Takeaway
Accelerated depreciation on land improvements makes mobile home parks one of the most tax-efficient cash flow vehicles in commercial real estate.