Filling Out and Turning a Medium Sized Park in a Small Town

[Jacob Brattain]

Hello All,

I'm going to look at an out of state mobile home park this weekend that I know is in pretty bad shape and only about 1/3 full.  I have SFHs and a few small apartment complexes, but this would be a first for me.

Quick run-down:

• 45 lots, with no room to expand
• 18 full - 15 POH and 3 paying just lot rent
• Public Utilities, proper zoning, paved streets
• Small town, around 45 minutes from any sizable town; around ~2,500 residents that are mostly blue collar, lower income
• I believe lot rent should be around $250-300 per spot once full and stabilized
• Current asking price is around $200k, with expenses running around 35-40% of gross income

My initial plan would be to give all POH to the current tenants if they agree to re-sign lot leases and update all utilities and other facilities as necessary in order be prepared for additional homes being moved in. 

 I'm mostly worried that it would be difficult to ever fill the park out and capitalize. Has anyone had experience with getting home manufactures to set demo units on lots and offer to finance them for new tenants?  Any other suggestions to turn the place around?

Thanks in advance!

[John Jacobus]

In small towns, you need to make sure there is demand for the kind of housing available in your park.  It’s not a foregone conclusion that you’ll be able to fill the vacant lots.  I recommend that you run test ads in the major paper and on Craigslist at your desired monthly lot rent to determine if there’s interest.  You want at least 30 calls over a 10 day period.  If you come in lower than that, I would not only be concerned about your plan to fill the vacant lots, but also about the overall viability to keep the park occupied and push rents.