Mobile Homes

What Investors Should Know About the 5-Star Rating System for Mobile Homes Parks

Expertise: Personal Development, Real Estate Investing Basics, Business Management, Mobile Homes, Real Estate News & Commentary, Landlording & Rental Properties, Mortgages & Creative Financing, Real Estate Marketing
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It is no secret that many newer mobile home investors will begin their careers by driving around mobile home communities located in their hometowns. This article is designed to give an easy “grading system” overview to keep in mind while driving local mobile home parks. On any given day, you may be able to drive through 10 to 20 mobile home parks in a reasonable timeframe. When you pass through the 10th mobile home park of the day, you may often forget exactly what park #4 looked and felt like. It is for this reason that it may be helpful to use a simple one through five rating system when judging mobile home parks completely by their aesthetics and appearance.

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Quickly grading parks can also make you more aware and alert for potential issues investing inside this park later. A five-star park is typically much more strict and thorough in its approval process than a one-star mobile home park. A two-star park may have lower lot rent, while a four-star park may have a heated pool and tennis courts. These are only general rules, and nothing is known for sure until you find out more about every park, park managers, the approval process, park rules, lot rent, the local market, buyers and more.

Related: What Investors Should Know About Mobile Home Pricing & Valuation

Why Do I Need to Know the Star Rating System?

Short answer: You do not technically need to rate parks like this. However, this subjective rating system may help you to notice and remember things in any given park you may have otherwise forgotten.

Longer answer: Understanding this superficial “star rating system” may help to understand what your future mobile home buyers are looking at when they see this park for the first time. Some buyers don’t mind living in a two-star park. Other buyers will be happy to pay two or three times more than the purchase price for a home in a gated community. The “grade” of any mobile home park will ultimately play a factor in the total purchase price you offer the seller and buyer of any given manufactured home within the park.

Ultimately, it is very important to not judge a book by its cover. Let’s take into consideration a dangerous one-star park. Some mobile home parks may currently be a one-star community; however, perhaps this park was just purchased by new management and they are in the process of cleaning up the community. This park may indeed need your help to bring in new homes and to help fix current mobile homes within the park needing rehab.

One-Star Community

UNSAFE TO GET OUT OF THE CAR. You would not let anyone you know live inside this park. There are gang signs and burnt out homes scattered around the premises. This park has quite a high crime rate. Likely pass on this home due to the high risk of theft while your property is vacant and also the type of high-risk buyers this low-end park and neighbors may likely attract.

Pro Tip: Before buying a mobile home inside a one-star park, you may want to ask local law enforcement if they are familiar with this park and any reputation associated with the community.

Two-Star Community

UGLY BUT SAFE. Although you may not wish to live here yourself, you can see a home in this park appealing to some buyers. There may be potholes and trash along the roads. There seems to be a low pride of ownership by the current owner and park management. Many of these homes are from the 1960s, 1970s, and 1980s. Many two-star mobile home parks will not have very strict application processes. Some of these parks may knowingly or unknowingly allow recent violent criminals or gangs into their community. These parks are good for investing in most areas.

Pro Tip: A park’s grade will never be a deal breaker by itself. There are many more factors that go into determining if a mobile home is a “deal” or “no deal.”

Three-Star Community

AVERAGE HOMES, ROUGH PARK CONDITIONS. Park is clean, but still needs to kick out some high-risk residents. Most of the homes are over 25 years old. Some trash is scattered on the grounds. You won’t mind buying a few more homes in this park if you can. There is a low degree of crime in this park. Three-star mobile home parks typically are fairly easy to be approved at and also look like clean communities to live in.

Four-Star Community

AVERAGE HOMES, CLEAN APPEARANCE. Average homes that may be 0-40 years old. Park is clean and has amenities. Management and roads are in good shape. Investing in homes located in four-star communities is definitely a wise idea when possible.

Related: 4 Common Mobile Home Title Issues (& How to Best Fix Them!)

Five-Star Community

WOW! THIS IS MOBILE HOME HEAVEN. As long as lot rent is not too high or the park approval restrictions are not too demanding, this park is good to go. This park is very clean. There may be a front gate and amenities that include golf, tennis, multiple pools, large recreation center, etc.

Pro Tip: You may need to drive through 20 to 50 mobile home communities before you have a good grasp on a one-star community versus a five-star community in your area. In the beginning, use your own best judgment. The same first reactions you feel is likely what your future buyer’s will be feeling, too.

In conclusion this article is not to inform you which parks to invest in, neither is this an article asking you to completely negate certain mobile home communities due to their outward appearance. Use the guide above in your notes while driving through local mobile home communities. In addition to knowing what homes are for sale, it is also wise to remember what the park looked like and what physical condition the park is currently at.

What caliber of mobile park do you like to invest in? Why?

Let’s talk in the comments section below!

Investing since 2002, John started in real estate accidentally with a 4-bedroom mobile home inside of a pre-existing mobile home park. Over the next 11 months, John added 10 more mobile homes to his cash-flowing portfolio. Since these early years, John has gone on to help 150+ sellers and buyers sell their unwanted mobile homes and obtain a safe and affordable manufactured home of their own. Years later, John keeps to what has been successful—buying, fixing, renting, and reselling affordable housing known as mobile homes. John shares his stories, experiences, lessons, and some of the stories of other successful mobile home investors he helps on his blog and YouTube channeland has written over 300 articles concerning mobile homes and mobile home investing for the BiggerPockets Blog. He has also been a featured podcast guest here and on other prominent real estate podcasts, authored a highly-rated book aimed at increasing the happiness/satisfaction of average real estate investors, and spoken to national and international audiences concerning the opportunities and practicality of successfully investing in mobile homes.

    Andrew Nissen Investor from Charlotte, North Carolina
    Replied about 4 years ago
    Good points John, Yes, they start to look similar after driving through a handful. Do you use a spreadsheet or checklist? Water, sewer, appearance, paving, park owned, tenant owned, rents and the like? I need to implement one. Appreciate the info. Andy
    Daniel Ryu Specialist from Irvine, CA
    Replied about 4 years ago
    Nicely broken down. Good info. @andrew – you could use google my maps to take notes on the park as you go. When I was doing due diligence on SFRs, I’ll create a my map of the area and add notes / links about each house. I wrote about My Maps on my BP Members Blog – article: Investing out of state..
    Bill
    Replied about 4 years ago
    Thanks John for sharing this good article about 5-Star Rating System. You have information of which very few people in the business are even aware.
    Jerome Davis from Statesboro, Georgia
    Replied about 4 years ago
    Thanks for the article! Do you know of any private lenders or any other means of financing MULTIPLE manufactured homes at once? Thanks!
    Jerry Agbon from Raleigh, NC
    Replied about 4 years ago
    Thanks John for this fantastic article on a branch of real-estate that is rarely discussed. I just have a quick question for you; what do you think of investing in mobile parks vs the individual mobile unit?
    Satinderbir Singh from Shawnee Mission, Kansas
    Replied over 2 years ago
    Very information article…