Whether you are an active mobile home investor purchasing mobile homes in pre-existing mobile home parks for profit or you are simply a mobile home buyer looking to purchase your next personal property in a local pre-existing mobile home park, this article is for you.
The 3 scenarios below are quite common, and it is likely you will see these same situations in parks near you while trying to purchase mobile homes. While many mobile home parks and park managers are rational, friendly, and welcoming to their residents, there are other community managers who care little for their residents and only for the bottom line.
While reading the situations below, try to mentally place yourself in these 3 scenarios. The bullet points raised below can cause you anxiety, lost time, and lost profit if not watched out for. Do not let this happen to you. After reading the list below, please keep these in your mind in the event you find yourself looking at purchasing mobile homes inside one of these types of parks.
3 Types of Mobile Home Parks That Cause Investors Anxiety, Wasted Time & Lost Profit
1. The “Strict Application” Park
While dealing with mobile homes inside a mobile home community, it is important to note that each park owner may dictate who lives within their walls. Most parks are reasonable in their application criteria — such as a credit scores over 550, income two to four times the lot rent payment, no evictions, and reasonable/minimal credit or criminal blemishes. However, some parks are irrational and far too strict in their requirements for residents.
Lesson: In the beginning of my career, I invested within a mobile home community that required a minimum credit beacon score of 700 to be approved to live in the park. The community also required a 4-page application requesting detailed employment verification for the past four years, past housing, references, bank information, automobile information, etc. I had too little experience to know that these “much stricter than usual” requirements from this park would make it very difficult to resell the home.
The mobile home spoke for itself. The property was beautiful, and it was purchased by my company for a very low price. I know now that the price was so low due to the difficulty in finding an approved buyer. When the home was advertised, it had no shortage of potential buyers wanting the property. The trouble came after the potential buyers left the home and headed to the park office for approval. Once finding out about the high criteria and high application fee the park demanded, few ever followed through with an application. After two month of holding the home, I began offering to pay for verbally qualified buyers to run their applications. I paid for six application fees before a family of two was approved for the park. I took a discount on the home when I resold, collected my profits, and have never done business in this park again.
Important to note was that I met a number of other sellers who were having the same complaint about selling their homes in this park. These home could have been purchased for a big discount; however, the hassle and time to try and resell would have not been worth the immediate upfront savings. Removing the homes from this park to another piece of land or friendlier park may make sense in this scenario.
2. The “Semi-Empty” Park
Imagine you are driving through an established mobile home community you have never been to before. You notice that there are approximately 25% or more of the existing pads free of mobile homes. This could be for a number of reasons.
- Transitional Period: The park may have recently kicked out a majority of the less desirable owners and/or homes in the park, thereby cleaning up the quality of the park. This happens when new management or ownership takes control of a loosely operated park. If this is the case, there is little to be concerned about.
- Poor Ownership and/or Management: Another reason many mobile home owners may choose to remove their homes from a community may be that unhappy living conditions exist due to hostile park management or unreasonably high lot rent fees.
Lesson: I have only seen this twice. The community residents rationally and almost unanimously despised the park management enough to cause many owners to pay to have their mobile homes moved out of a park they have lived in for years. If a park manager is too strict, bossy, demanding, prejudiced, negligent, and/or greedy for too long, this could cause a mass exodus in a community. If you get this impression from local residents or park managers, strongly reconsider a long-term relationship with this park.
3. The “Rude Management” Park
Most park managers are caring and rational people just like you. In addition, they oftentimes have thankless jobs and give much of themselves to their local communities. Much of the time when you correctly approach park managers aiming to help, they are approachable and willing to discuss business with you. However, sometimes park managers are in a bad mood or may be busy. When meeting a park manager for the first time, be aware that you are screening this person as well as the park itself. You will be forming a relationship with this park manager, and it is important you both like and respect each other.
Lesson: Without meeting the manager a few times, it is difficult to say whether or not this park manager is always happy, rude, greedy, bossy, etc. Instead, plan to interact with the park manager at least three times before you purchase a mobile home within any community.
In short, there are many moving parts to every decision that goes into whether or not you should invest in any property. When a mobile home is located in a mobile home community, this only adds to the variable of factors to consider. If you have further questions, do not hesitate to reach out below.
Any other kinds of parks that have given you a bad experience?
Let me know with a comment!