Looking to Buy a Mobile Home Park Out of State
New to Real Estate · Memphis, TN · Member since 2022 · 95 posts · 71 votes
Looking to Buy a Mobile Home Park Out of State
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Real Estate Coach · Miami, FL · Member since 2024 · 1k+ posts · 479 votes
1yMichael, sounds like you're off to a solid start working in land acquisition and looking into MHPs near your hometown is a smart move. When evaluating the deal, push for details on occupancy, lot rent, utility setup (public vs private), park-owned vs tenant-owned homes, expenses (including deferred maintenance), and any zoning or legal compliance issues. A rent roll and trailing 12-month financials are key.
Since seller financing is off the table, your best options are likely a commercial loan or private/hard money, especially if the park needs value-add work. Some lenders specialize in mobile home parks and can offer creative structures depending on the stability of the asset.
Happy to chat more if you want to dig into deal structuring or financing options, just reach out.
7 Replies
- Real Estate Coach · Miami, FL · Member since 2024 · 1k+ posts · 479 votes1y
Michael, sounds like you're off to a solid start working in land acquisition and looking into MHPs near your hometown is a smart move. When evaluating the deal, push for details on occupancy, lot rent, utility setup (public vs private), park-owned vs tenant-owned homes, expenses (including deferred maintenance), and any zoning or legal compliance issues. A rent roll and trailing 12-month financials are key.
Since seller financing is off the table, your best options are likely a commercial loan or private/hard money, especially if the park needs value-add work. Some lenders specialize in mobile home parks and can offer creative structures depending on the stability of the asset.
Happy to chat more if you want to dig into deal structuring or financing options, just reach out.
- 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Michael Dallas:
Hey BP, (I also posted this in the Out of State Investing Forum)! I am in my 1st year out of college working at a commercial land acquisition company in North Carolina. I am currently looking to purchase a mobile home park just outside of Memphis, TN, where I am from. Trying to get as much information from the seller about the property as possible. What are some things I should be asking and information I need to make a sound decision? They have had a person on site that just collects rent every month; that is the extent of management they have currently.
The seller is not interested in seller financing the entire deal. He has some health issues; he said he wants to have cash on hand to deal with them in the upcoming years. From a financing standpoint, what are my best options?
Any and all information/advice would be great! Thank you everyone so much for your time and knowledge!
Hey Michael, welcome to BP! Sounds like an exciting first deal you’re working on. When looking at mobile home parks you’ll want to get clarity on a few key things: are the homes tenant-owned or park-owned, what’s the current occupancy and market rent compared to what tenants are paying now, what’s included in the rent (utilities, lot only, etc.), and what the infrastructure looks like (sewer, water, electric) because those systems can make or break the deal long term. Since management has basically been someone collecting rent, you’ll also want to know what the expense side really looks like—maintenance, repairs, taxes, insurance, all of that—because often sellers underreport if they’ve been doing it informally. On financing, if the seller isn’t open to terms and you’re newer, a local/regional bank that understands mobile home parks might be your best option since big lenders can be picky with first-timers. Partnerships or bringing in investors are another way some folks get creative if bank financing is tough. Since you’re from Memphis, you know the area well which is a big plus, but if you’re open to other markets too, I’d suggest checking out Columbus, Ohio. I moved here from Portland in 2020 and now own 10+ rentals—it’s one of the hottest markets in the country right now with huge job growth, companies like Intel, Amazon, Google, and Honda investing here, and you can still find properties in the $120–180K range that hit the 1% rule and cash flow day one. Long term appreciation has also been really strong here. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9124 Reviews - 1yBonnie Griffin KaakePro MemberReal Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
@Michael Dallas The two people that commented above have given you some very good information. You may also want to check what the county is using as a land assessed value versus a total assessed value. Dividing the total assessed value into the land value will give you the percentage of your purchase price that is usually used as the land value percentage of your purchase price. Or, another option is that when your bank does an appraisal, ask for the land value to be included in that appraisal.
This information is going to help determine how much you can take as Bonus Depreciation in your first year of ownership. Land cannot be depreciated. Once you have purchased the property you will want to get a no-cost estimate for an engineering-based cost segregation study. Don't pay more in taxes than you need to pay. Invest that cash-flow in something that will give you a good return such as improvements or purchasing another property.
- New to Real Estate · Memphis, TN · Member since 2022 · 95 posts · 71 votes1y
Thank you so much; these are all things I am taking into account before making an offer!!
- 1yShuff MauldinPro MemberInvestor · MS AL TN, GA · Member since 2019 · 70 posts · 45 votes
Hey Michael - in addition to the other basics already mentioned, ask for rent rolls. Im always curious if they jumped rents before selling. I also want to see whose a payment problem.
Utilities are a BIG deal and where you need to spend a good amount of time getting to know what you are buying. City utilities are ideal, septic is "ok", well water is a deal breaker for me personally. If it's a large park (100+) you might consider at least a 90 day due diligence to asses the utilities.
If there are vacant pads determine how long they have been vacant and why. The utilites might need work to get the pad operable.
Ask "what push back have you gotten from the city around adding new homes or pads". You don't want a scenario where the municipality is going to really make it hard to replace an old trailer with a new one.
Assess the flow of water through the park. You don't want water running close to or under any trailers.
Ask if anyone has given them notice they will be moving out.
For any park owned homes:
1. ask for copies of the leases (provide a simple NDA letter for the owners comfort) or let them know you will need them once under contract. Make sure they are not wonky or make sure they didnt commit you to any long term leases at below market rents.
2. ask for all updates to the homes themselves and updates to utilities.
For the park in general:
1. ask for financial statements (3 years) - really look for and ask questions around ongoing maint and cost to run the park. That said, determine your own cost to own and run the park. They might have $100 a month for grounds maintenance but it might cost you $300. Take a close look at garbage. If it is city pick up thats great. If not look at their dumpster contract and get quotes from other waste mgmt businesses.
2. assess the drives. if they are paved determine what it will cost you to have the resealed, patched, etc. If they need it, its a great reason to show the tenants you are improving the park and a reason for you to raise rents.
3. assess the park rules and regs. If they are good ones, and have not been enforced, all you have to do is come in and start enforcing. If they do not have any or they are bad, you will have some headaches trying to get people to fall in line. Again, regarding the contracts/leases, any long term leases somewhat lock you in on these rules and regs in place.
4. this is a big one - Make darn sure you dont have a "Lanny" tenants with multiple homes in the park. I had one "tenant" with three trailers in a 52 pad park. That's not too many, but 20% would be. What you want to avoid is a situation where another investor is leasing space in your park and makes up a considerable % of your revenue. You will hear horror stories of Lanny dealers who refuse to pay a rent increase and move their homes out causing a big impact to revenue. My person with 3 trailers moved theirs out year one but I planned on it in my financials so I was negotiating with them without fear.
Regarding the financial statements:1. Take a close look at the revenue numbers and see if they had any revenue for late payments, or really anything outside of pad/trailer rent. If they dont, that's added revenue you can count on day one. I had an additional $250 a month when I started from late fees that were not being collected.
Those are the ones that come to mind first.
Here is a list of questions I sent a broker who had a 36 pad park listed for sale in AL:
Park owned trailers: Trailer numbers, year make model and updates / cap ex over their life please.
Grounds: what are the monthly expenses for grounds maint the past 3 years? Any details would help.
Insurance: $3900 for the park? What about the ins for the park owned trailers?
Elect shown is for lighting only. Where would power for vacant trailers be listed?
Please provide tenure of each tenant.
Please provide park rules and regs.
What software are they using for both the gate and management system?
The phone / Internet line item - can you give more details what exactly thats for?
Financial statement related
Water:
Can the trailers be individually metered? Has it been priced?
Payroll line item. Who was this paid to and for what?.
Please provide rent rolls for each prop for the past 3 years.
I hope this helps. Feel free to reach out if I can help, and good luck.
Shuff
- New York, NY · Member since 2021 · 20 posts · 12 votes1y
Great resource for newbies interested in mobile home parks!: https://www.skool.com/mobilehomepark
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