Mobile Home Investing With The Path of Least Resistance: The Mobile Home Community

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Welcome back,

While starting a new side business of real estate investing it can be important to take some time to understand the field you are climbing into. Additionally, once you have more and more clarity it can be prudent to try and stack the deck in your favor as the real estate investor.

When starting in a new area of real estate investing or revamping your current process let us begin by taking the path forward with the least amount of hurdles between where you are currently and the rewards of having a profitable and consistent investing business.

Over the past decade there are a few areas in which I have seen new investors struggle where there is no need to be struggling. The below list is a brief outline of just a  few of these areas when it comes to mobile home investments inside pre-existing mobile home communities.

Mobile home communities can be owned by a large corporation or just a single person. Parks will have a variety of rules and restrictions that all residents must follow.

With a quick call the information below is easy to obtain and analyze. During this call do not mention your intentions of buying and reselling mobile homes within their park. This is reserved for a later discussion with the park management.

RelatedHow Much Do You Know About Investing In Mobile Homes?

Park Lot Rents

Mobile home communities typically are realistic when it comes to the amount they charge for monthly pad-rent or monthly lot-rent. With that said there are greedy parks that over charge their residents for the land and some of these residents may eventually move away. While starting to invest in individual mobile homes inside parks aim to be inside parks that charge an average price from the general area. If you call around to 10 parks in one zip code and every park charges $400-$500 per month, do not go through the park that charges $600+ per month.

A rule of thumb is that you cannot charge more per month for a park with a gate and pool, but you can charge more for a mobile home with more bedrooms compared to a smaller mobile home. In short a higher lot rent will typically reduce your cash flow monthly compared to a park with a lower lot rent.

Related: 5 Reasons Not to Invest In Mobile Homes

Additionally if you are in a hot-spot area where the lot rents are all over $650 per month then aim to travel inland or to a different area to find areas with park lot rent below $650 per month to start. Here you will find more affordable mobile homes and less of a cash buyer demand, both of these are good for us as investors.

Age Restrictions

Some parks in certain areas around the country cater to a “senior citizen” experience. Whether you are the required age to live in this park or not you could likely purchase a mobile home investment inside the park however I will advise against this on your first few deals. When selling a mobile home inside a senior park you are eliminating a large demographic of your buyers.

Some parks have other unique age restrictions, such as no minors staying in the park over night, no one under the age of 40 may live in the park, and/or only persons older than 65 may own in the park. Either way stay away from these parks until you understand this business and have a few deals under your belt.

Owner Occupied

If you are looking to purchase a mobile home inside a park that only rents mobile homes to tenants versus allows the tenants to own their own homes you will not have much luck. In short make sure that every mobile home park allows owner occupants to buy/own homes within the park and not just rent the homes.

Pet Friendly

This is not a deal-breaker piece of criteria in my book but many of your future buyers will have or want pets. Some parks completely forbid any pets and other parks will only allow certain pet weight limits. For your first few homes inside parks aim for the path of least resistance and only invest in parks that do allow most pets.

In conclusion many parks are fair game but do not restrict who you may resell to or who would be a good candidate based on park requirements and approval. Investing in individual mobile homes inside pre-existing mobile home parks that allow all ages inside, allow pets, and have average or below-average lot rents will drastically help you get started with less resistance through your first few deals.

In the next article we will be looking specifically at the mobile homes and manufactured homes themselves under the same spot-light of investing with the most ease.

Love what you do daily,

John Fedro

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About Author

John Fedro has been investing in manufactured housing since 2002. John now spends his time continuing to build his cash-flow business in multiple states while helping others enjoy the same freedom he has achieved. Find John here.

11 Comments

  1. I have often considered a Mobile Home park investment. It is like an apartment building, in terms of the multiple tenants, but I think less maintenance. You still have the multi-family concept in terms of cash flow, and cap rate, but no interior maintenance.

    But how do you evict someone for being a menace to the neighborhood? Are they just annual leases?

    • Hi Eric,

      The headline for this post is a little misleading. My many area of investing for the past 13 years has been investing in the individual homes of the park and on private land. However just now am looking to purchase my first complete park. With that said the answers to your questions are based on my experience inside parks and dealing with park owners over the years.

      First off I love your ambition to own a park. It is a great idea as far as I am concerned. They are basically long-term parking lots you own.

      Q: But how do you evict someone for being a menace to the neighborhood? Answer: If they are breaking the lease you simply evict the home and owner.

      Q: Are they just annual leases? Answer: Rarely annual. 99% of the time it is monthly.

      Hope this helped and talked soon,
      John Fedro

  2. Any financial criteria for choosing a park?

    >90% occupant owned parks cap at 8% or better ??? (true or false?)

    >90% rented parks cap at 10-12% or better?? (True or false?)

    Of course individually metered water and needs to be city water. Some parks have wells. Some parks have septic systems (shared) or per lot… There’s is alot of physical issues in evaluating MHP deals at my beginning level.

    • Hi Curt,

      Do you have a mentor or someone you can ask all your questions too and have them review your deals? If not I suggest you do this asap. It will help your confidence, give you unlimited answers, and move you along quicker than anything else.

      Most items and conditions of the park are negotiable depending on price and terms being asked.

      With regards to your 2 main questions I can tell you I am only looking to own parks that are owner-occupied. If the parks are not owner occupied I am selling the homes asap once I own the park. This is because I am not looking to own the MHs and do repairs as renters leave and mess up the homes. However everyone’s goals are different and clarity for what you want is key for forward progress. Does this make sense? feel free to comment back any comments or questions.

      Talk soon,
      John Fedro

  3. Are mobile parks usualy occupied by less desirable people? Rednecks and such?
    Are they worth the trouble of dealing with?

    • Hi Mike,

      Thanks for commenting. You bring up a really really great point. This point is that most average Americans have little idea about who really lives in these parks. 14 years ago I would have agreed with you on the redneck or “lower class” idea. However now that I have been involved in 100+ deals and have worked with some of the greatest buyers I know I can tell you there is certainly a mix great people and low quality people in each park. By “low quality” I mean folks that lie, cheat, steal, take advantage, are high-risk, etc.

      In short you will only be selling to low-risk buyers you like and trust and that meet your criteria. Do not let social stigma hurt your future profits and lifestyle. I hope this has helped.

      Talk soon,
      John Fedro

      • Hi John,

        Can you elaborate on low-risk buyers a little bit? What is an overall business model of a mobile park? Do you just rent pieces of land and thus don’t have to worry about bad tenants as they can only destroy the building and not the land?
        What are buyers in this case and what do they buy from you?

        Thanks

  4. Mike rednecks and undesirable tenants live in stick built, brick built, homes and apartments as well, just like desirable tenants live in mobile homes.

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