Attention all LOT RENT Mobile Home Park Owners.....

[Account Closed]

How is your ownership of a lot rent park beneficial to you? Is your ownership absentee considering the fact that you do not own the mobile homes and therefore it requiring less attention? Is cash flow based on the amount of rent and spaces you have rented out? Types of expenses? Please share your experiences 

[Collin Goodwin]

Ajay,

1. Most MHP's are set up where the owner owns the land and rent's lots to tenants who own their own Mobile Homes. IMO, this is also the most desirable set up as you are not responsible for maintenance in the homes. In reality, many MHP owners lease park owned homes to improve occupancy.

2. Although you may not need to focus attention on the homes themselves, it is your responsibility to maintain all infrastructure within the park and make it a desirable and functional place to live.

3. MHPs are valued via NOI and often measured by CAP rate. NOI = gross rents - expenses. Cap rate = NOI/Purchase Price. Therefore, the more spaces you rent out, theoretically the greater the cash flow and park value.

4. I previously mentioned infrastructure as a owner-expense. Some examples of infrastructure would be: paved roads, electric, water, sewage, grounds maintenance etc.. it is essential as a park owner to understand your infrastructure. IMO it is most desirable to be on city water/sewage, but there is a cost associated with each.