I am looking into investing in MHP's and trying to research all of the downside, which there seems to not be too many. My question is, there is a lot of talk about how it is a positive that it costs thousands of dollars to move your mobile home out of a park, in which case your turnover is very low. But on the flip side, isn't just as bad if and when you take over a distressed MHP with high vacancy? How do you fill your lot when the costs are that high to move a mobile home? Just wondering if I am missing something and filling vacancies is easier that I am thinking. Any feedback wouldbe great.
Check our Park Street Partners’ podcasts. They touch upon many important topics, including the one you brought up here.
@Kyle Mitchell Let's say moving a mobile home costs some $4K. This amount is a lot of money for the average mobile home dweller. Thus, MH owners aren't too inclined to move a MH from park A, to park B, to save a few dollars in lot rent. On the other hand, $4K isn't necessarily a lot of money for a MHP investor, especially one that has budgeted for such situations.
For new investors, it may be best to avoid turnaround parks (needing to fill lots). Among other things, these parks demand capital that may not always be easy to obtain financing for.
@Kyle Mitchell Yes, you're right. It does cost money and time to fill lots. If you've got a good team lined up, it helps. Many new investors who get into the business lack the experience and network which delays the process. Good luck!
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Full parks are the premium option for this exact reason. You will have to come out of pocket, or collateralize the homes (if your market supports it) to infill any park that is not full.
However don't take your eye off of the ball managing the existing park and tenants. If you cannot get that right, those homes will either 1) rot; or 2) get moved out - and it's all for nothing.
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