What Do You Look at FIRST When Evaluating a Mobile Home Park?

Question

I’ve been spending more time learning from investors who specialize in mobile home parks, and one thing that stands out is how different these properties can be from other commercial real estate.

From the lending side, there are several things I’d want to understand early:

• How many total pads are there?
• How many are currently occupied?
• Are the homes tenant-owned or park-owned?
• What are current lot rents compared with the market?
• Who pays the utilities?
• Are utilities individually metered?
• Public or private water/sewer?
• What deferred maintenance exists?
• Are there vacant pads that can realistically be filled?
• What does the trailing NOI actually look like?

But I’m curious about this from the owner/operator perspective.

For those of you who have purchased mobile home parks:

What are the first 3–5 things you look at when a deal hits your desk?

And even more importantly, what's a red flag that might make a newer investor think twice before pursuing the property?

I’d love to hear what experienced MHP owners have learned that isn't obvious from the offering memorandum.

Michael K Gallagher · Answer

market first.  is the need for housing, jobs, etc sufficient to support the range of offering you will have.  is the demographics of the area going to support the growth of the asset you are looking for?  is there a higher and better use for the dirt regardless?  all things i'd consider prior to considering any of physical attributes of the park.