PROS vs CONS of Mobile Home Park Ownership?

[Dan Gandee]

After purchasing multiple parks and managing them over the past few years here's my synopsis of the pros and cons of owning a park. What has been your experience? 

Pros:

1. Steady Income: One of the biggest advantages of owning a mobile home park is the potential for a steady stream of income. As the owner of the park, you lease the land to tenants who own their mobile homes. This allows you to collect monthly rent from each mobile home owner, creating a reliable source of income. We've noticed great net operating income from our parks and continue to force appreciation through annual rent increases. 
2. Lower Operating Costs: Compared to other types of real estate investments, mobile home parks generally have lower operating costs. Unlike owning rental properties, you are not responsible for the maintenance and repairs of the individual mobile homes. Instead, you are only responsible for the common areas and infrastructure of the park, such as roads, utilities, and amenities. This can result in lower ongoing expenses, making it an attractive investment option for some. This can be somewhat of a incorrect data point as our parks expense ratios are in the 25%-35% range. 
3. Demand for Affordable Housing: With the rising cost of traditional housing options, there is a growing demand for affordable housing. Mobile homes provide an affordable housing solution for many people, especially those on a tight budget or looking for a more flexible living arrangement. Owning a mobile home park allows you to cater to this demand and provide an affordable housing option for tenants, which can result in a stable tenant base and consistent occupancy rates. We have seen this demand through mobile home listings on the brokerage side and it still continues to be strong. We've never had an "expired" MFH listing and this shows us that affordable housing is at it's highest demand ever. 
4. Potential for Appreciation: Like any other real estate investment, mobile home parks have the potential for appreciation in value over time. As demand for affordable housing increases and land becomes scarce, the value of mobile home parks can increase, resulting in potential capital gains for the owner. This has been the biggest gain for our portfolio by repositioning the asset by forcing net operating income and through improvements. 

Cons:

1. Management Challenges: Managing a mobile home park can come with its own set of challenges. Dealing with tenant issues, enforcing park rules and regulations, and overseeing maintenance and repairs can be time-consuming and require effective management skills. If you're not prepared to handle these challenges or hire a property manager, owning a mobile home park may not be the right investment for you. This definitely has been a challenge for us since tenant disputes can get out of hand and suck the moral of the specific area of the park down. We deployed professional property management to combat this. 
2. Dependence on Tenants: The success of a mobile home park is heavily dependent on the tenants who lease the land. If you have high turnover rates or struggle to attract and retain quality tenants, it can impact your rental income and profitability. Additionally, mobile home park tenants may have limited financial resources, which could affect their ability to pay rent on time, leading to potential collection challenges. We fortunately have not run into these issues by screening tenants well and keeping rents affordable. 
3. Regulatory Requirements: Mobile home parks are subject to various regulations and laws, including zoning and land use regulations, health and safety codes, and tenant protection laws. Compliance with these regulations can be complex and require ongoing effort and expense. Failure to comply with regulatory requirements can result in fines, penalties, and even legal disputes, which can impact your investment returns. We keep detailed checklists of all the items that are annually required to keep our parks running which includes water testing, park registration, septic maintenance, and licensing. 
4. Limited Financing Options: Financing a mobile home park can be more challenging compared to other types of real estate investments. Traditional lenders may have stricter lending criteria for mobile home parks, and obtaining financing may require a higher down payment or come with higher interest rates. This can make it more difficult to acquire and finance a mobile home park, especially for first-time investors. We avoided this problem by deploying owner financing and locking in great terms. 

Love keeping in touch with other owner/operators so please reach out! 

-Dan Gandee

[John Boutros]

Quote from @Dan Gandee:

After purchasing multiple parks and managing them over the past few years here's my synopsis of the pros and cons of owning a park. What has been your experience? 

Pros:

1. Steady Income: One of the biggest advantages of owning a mobile home park is the potential for a steady stream of income. As the owner of the park, you lease the land to tenants who own their mobile homes. This allows you to collect monthly rent from each mobile home owner, creating a reliable source of income. We've noticed great net operating income from our parks and continue to force appreciation through annual rent increases. 
2. Lower Operating Costs: Compared to other types of real estate investments, mobile home parks generally have lower operating costs. Unlike owning rental properties, you are not responsible for the maintenance and repairs of the individual mobile homes. Instead, you are only responsible for the common areas and infrastructure of the park, such as roads, utilities, and amenities. This can result in lower ongoing expenses, making it an attractive investment option for some. This can be somewhat of a incorrect data point as our parks expense ratios are in the 25%-35% range. 
3. Demand for Affordable Housing: With the rising cost of traditional housing options, there is a growing demand for affordable housing. Mobile homes provide an affordable housing solution for many people, especially those on a tight budget or looking for a more flexible living arrangement. Owning a mobile home park allows you to cater to this demand and provide an affordable housing option for tenants, which can result in a stable tenant base and consistent occupancy rates. We have seen this demand through mobile home listings on the brokerage side and it still continues to be strong. We've never had an "expired" MFH listing and this shows us that affordable housing is at it's highest demand ever. 
4. Potential for Appreciation: Like any other real estate investment, mobile home parks have the potential for appreciation in value over time. As demand for affordable housing increases and land becomes scarce, the value of mobile home parks can increase, resulting in potential capital gains for the owner. This has been the biggest gain for our portfolio by repositioning the asset by forcing net operating income and through improvements. 

Cons:

1. Management Challenges: Managing a mobile home park can come with its own set of challenges. Dealing with tenant issues, enforcing park rules and regulations, and overseeing maintenance and repairs can be time-consuming and require effective management skills. If you're not prepared to handle these challenges or hire a property manager, owning a mobile home park may not be the right investment for you. This definitely has been a challenge for us since tenant disputes can get out of hand and suck the moral of the specific area of the park down. We deployed professional property management to combat this. 
2. Dependence on Tenants: The success of a mobile home park is heavily dependent on the tenants who lease the land. If you have high turnover rates or struggle to attract and retain quality tenants, it can impact your rental income and profitability. Additionally, mobile home park tenants may have limited financial resources, which could affect their ability to pay rent on time, leading to potential collection challenges. We fortunately have not run into these issues by screening tenants well and keeping rents affordable. 
3. Regulatory Requirements: Mobile home parks are subject to various regulations and laws, including zoning and land use regulations, health and safety codes, and tenant protection laws. Compliance with these regulations can be complex and require ongoing effort and expense. Failure to comply with regulatory requirements can result in fines, penalties, and even legal disputes, which can impact your investment returns. We keep detailed checklists of all the items that are annually required to keep our parks running which includes water testing, park registration, septic maintenance, and licensing. 
4. Limited Financing Options: Financing a mobile home park can be more challenging compared to other types of real estate investments. Traditional lenders may have stricter lending criteria for mobile home parks, and obtaining financing may require a higher down payment or come with higher interest rates. This can make it more difficult to acquire and finance a mobile home park, especially for first-time investors. We avoided this problem by deploying owner financing and locking in great terms. 

Love keeping in touch with other owner/operators so please reach out! 

-Dan Gandee

 Good post! I'd agree with your points here from personal experience with multiple parks. We are in acquisition phase of growing our portfolio of parks with my partners.

Shoot me a PM if you'd like to connect! Enjoy connecting with other owners/operators.

[Jordan Moorhead]

@Dan Gandee do you broker parks?

[Dan Gandee]

Quote from @John Boutros:

Quote from @Dan Gandee:

After purchasing multiple parks and managing them over the past few years here's my synopsis of the pros and cons of owning a park. What has been your experience? 

Pros:

1. Steady Income: One of the biggest advantages of owning a mobile home park is the potential for a steady stream of income. As the owner of the park, you lease the land to tenants who own their mobile homes. This allows you to collect monthly rent from each mobile home owner, creating a reliable source of income. We've noticed great net operating income from our parks and continue to force appreciation through annual rent increases. 
2. Lower Operating Costs: Compared to other types of real estate investments, mobile home parks generally have lower operating costs. Unlike owning rental properties, you are not responsible for the maintenance and repairs of the individual mobile homes. Instead, you are only responsible for the common areas and infrastructure of the park, such as roads, utilities, and amenities. This can result in lower ongoing expenses, making it an attractive investment option for some. This can be somewhat of a incorrect data point as our parks expense ratios are in the 25%-35% range. 
3. Demand for Affordable Housing: With the rising cost of traditional housing options, there is a growing demand for affordable housing. Mobile homes provide an affordable housing solution for many people, especially those on a tight budget or looking for a more flexible living arrangement. Owning a mobile home park allows you to cater to this demand and provide an affordable housing option for tenants, which can result in a stable tenant base and consistent occupancy rates. We have seen this demand through mobile home listings on the brokerage side and it still continues to be strong. We've never had an "expired" MFH listing and this shows us that affordable housing is at it's highest demand ever. 
4. Potential for Appreciation: Like any other real estate investment, mobile home parks have the potential for appreciation in value over time. As demand for affordable housing increases and land becomes scarce, the value of mobile home parks can increase, resulting in potential capital gains for the owner. This has been the biggest gain for our portfolio by repositioning the asset by forcing net operating income and through improvements. 

Cons:

1. Management Challenges: Managing a mobile home park can come with its own set of challenges. Dealing with tenant issues, enforcing park rules and regulations, and overseeing maintenance and repairs can be time-consuming and require effective management skills. If you're not prepared to handle these challenges or hire a property manager, owning a mobile home park may not be the right investment for you. This definitely has been a challenge for us since tenant disputes can get out of hand and suck the moral of the specific area of the park down. We deployed professional property management to combat this. 
2. Dependence on Tenants: The success of a mobile home park is heavily dependent on the tenants who lease the land. If you have high turnover rates or struggle to attract and retain quality tenants, it can impact your rental income and profitability. Additionally, mobile home park tenants may have limited financial resources, which could affect their ability to pay rent on time, leading to potential collection challenges. We fortunately have not run into these issues by screening tenants well and keeping rents affordable. 
3. Regulatory Requirements: Mobile home parks are subject to various regulations and laws, including zoning and land use regulations, health and safety codes, and tenant protection laws. Compliance with these regulations can be complex and require ongoing effort and expense. Failure to comply with regulatory requirements can result in fines, penalties, and even legal disputes, which can impact your investment returns. We keep detailed checklists of all the items that are annually required to keep our parks running which includes water testing, park registration, septic maintenance, and licensing. 
4. Limited Financing Options: Financing a mobile home park can be more challenging compared to other types of real estate investments. Traditional lenders may have stricter lending criteria for mobile home parks, and obtaining financing may require a higher down payment or come with higher interest rates. This can make it more difficult to acquire and finance a mobile home park, especially for first-time investors. We avoided this problem by deploying owner financing and locking in great terms. 

Love keeping in touch with other owner/operators so please reach out! 

-Dan Gandee

 Good post! I'd agree with your points here from personal experience with multiple parks. We are in acquisition phase of growing our portfolio of parks with my partners.

Shoot me a PM if you'd like to connect! Enjoy connecting with other owners/operators.

 Definitely let's connect! Happy to share my experiences. 

[Dan Gandee]

Quote from @Jordan Moorhead:

@Dan Gandee do you broker parks?

 I could broker parks if I wanted to, but my investment company is actively owning and operating a few. Do you have a buyer looking in Oregon?

[Jordan Moorhead]

@Dan Gandee I have a buddy who buys parks in Oregon and I'm actually looking for one in the midwest, southeast or Texas myself

[Dan Gandee]

Totally! Just let me know if you want to connect sometime and be happy to share any insights. We've spent years compiling a list. 

[Dolly Caswell]

Hi Dan, I'm looking for a mobile home park and would consider Oregon. I live and invest in Alaska and our parks for sale are few and far between. If you have any suggestions I'd appreciate it. Thanks, Dolly

[Logan M.]

@Dan Gandee, I love this list you have put together. 

One aspect of the Cons section that I want to point out is that many of those challenges can be mitigated. For example, finding the right credit union can take a lot of pain out of financing.

Regulations are a difficult piece in the equation so my only suggestion which is not foolproof is vetting the local government before a purchase.

Management is always a huge pain point in any large multifamily project. A few back-end changes we have made to help with this are 1. We centralize as many of the processes as possible 2. We only accept online payments through our Rent Manager payment portal and 3. We like to stop by often without notice.

It may not be perfect but I hope this helps someone reading out there to learn from my mistakes.

[Dan Gandee]

I'm so glad this was a helpful forum article as I've had to learn myself most of these battles as we transition into new acquisitions or find out by accident :)
@Logan M.

[Cliff Benner]

What kind of Property management is used for a MHP? Do you look for a MHP Specific PM for this?

[Dan Gandee]

@Cliff Benner - I typically like to hire owner/operators that own property management companies, meaning they have experience with MFH and MFH Parks. My current PM owns two parks and was carefully selected because he understood the unique tenant-landlord laws of these communities, water-testing standards, continuing education requirements, and total valuation repositioning for commercial property cap rate stabilization. I'd call other owners of MFH parks and ask them how they manage the parks. Typically the self-managed parks with owners that live onsite are the WORST operators because they do not have an outside perspective. They hide costs in their P&L and their time operating/managing isn't configured in the sale price valuation. Let me know if you have any other questions.