When Does Owning A MHP Make Sense?

[Don Konipol]

Isn’t owning a MHP where you own the mobile homes and lease them out just the same as owning an apartment complex but with the greater problems of maintenance, low end tenants, etc.?  Isn’t the advantage of MHP ownership the fact that you own the land (pad sites), have limited maintenance and limited management, and that tenants tend to be long term because mobile homes are costly to move? 

[Jay Hinrichs]

Quote from @Don Konipol:

Quote from @Roger D Jones:

Quote from @JD Martin:

Quote from @Don Konipol:

Isn’t owning a MHP where you own the mobile homes and lease them out just the same as owning an apartment complex but with the greater problems of maintenance, low end tenants, etc.?  Isn’t the advantage of MHP ownership the fact that you own the land (pad sites), have limited maintenance and limited management, and that tenants tend to be long term because mobile homes are costly to move? 

 I would never own a park where I owned the trailers unless I had a good plan to sell the trailers. All I would want is the lot rent. That said, I know a few MHP operators that make some pretty tremendous money on the trailers, mostly by renting to people who need to pay in cash and have someone not ask a lot of questions - illegal/undocumented immigrants, transients, probably some criminals for sure, sometimes people (mostly women) hiding from domestic abusers, etc. People like this generally want to rent until they want to leave, which might just be week to week, and don't want any paper trail. But it is a lot of work and the ones I know also make sure to have a firearm when they are collecting rent in their parks. 

JD
I don't know if I would paint POH residents with such a broad brush.  We have great long term residents in our POH rentals and do very well financially with them.  The key to this though is you to maintain your properties.  Mobile homes are like baby chick eggs... easy to damage but also easy to repair.  We stay way out in front of our maintenance and yes it pushes up our costs but our NOI is 30% higher than if we were all TOH.  

The root problem with POHs is that many park owners become greedy and lazy in their management which then allows these homes to fall into complete and utter disrepair.  They then decide one day to sell and throw these ridiculously low maintanance costs out on their proformas not understanding how they sucked the life out of their assets.  I get to work with a lot of heavy equipment and power tools in my current job.  We do monthly maintenance on every single piece of equipment every month- whether it needs it or not.  I jump in a pickup truck- it starts, skid steer- it starts, chain saw- one pull it starts.  

Everyone loves the TOH parks- but they are becoming increasingly hard to find.  POH are a part of our industry whether you keep them, sell them or tear them down.  With equity fund groups buying up all the TOH parks we as private investors will have to learn how to be cautiously successful in the POH park opportunity.  

Are MHP with no park owned homes a PASSIVE investment, while a MHP with park owned homes an ACTIVE investment? 

Don in my experience with the 3 parks we owned.. owning the park homes was a huge time suck most of them are old and have tons of differed maintenance and parts are not available as easy.
Only way i would do it is to have enough of them to have a full time on site handyman who knew how to fix those things. but thats just me.