One deal killer for MHP

[Charlotte Dunford]

What is your one deal killer for mobile home parks sized 30 units, 60 units, and 90 units? For me, it's well water, lagoons, and not in a metro. What are factors that automatically disqualify a deal for you?

[John Jacobus]

I am OK with water wells but agree that rural areas and lagoons are deal breakers.

I would add “lack of sufficient affordability gap” to the list of deal breakers.  For example, there needs to be a decent gap between the cost of alternative forms of housing and the product offered at the mobile home park.  If you put yourself in the rational consumer’s shoes, you would consider the total cost of each of the following housing options:

A) a monthly mortgage payment + utilities + insurance + taxes on a single family home that you buy

B) a monthly rental payment + utilities on a 3 bedroom single family home that you rent 

C) a monthly rental payment + lot rent + utilities on a 3 bedroom mobile home rental that you rent 

D) a monthly mortgage payment + lot rent + utilities + insurance + taxes on a 3 bedroom mobile home that you own (own the home and rent the land)

A deal breaker for me is a situation where there’s <$200 spread between options A/B and C/D.  Effectively, I run away from markets where alternative housing options (owning or renting stick built homes or renting an apartment) are the same cost or moderately more expensive than mobile home options.  To ensure sufficient demand, there needs to be a decent spread between alternative housing options and options in the MHP.  This is the affordable housing business so the product actually needs to be affordable in the market relative to alternative options.