Filling vacant lots in a small mobile home park
I am analyzing a deal for a 21 space mobile home park in a rural Iowa town. 13 of the spaces are occupied, 8 of which are park owned. The remaining 8 spaces are vacant. I am curious if anyone has experience bringing new mobile homes into a park of this size? The population of the town is around 1,300 with a median income of $56,000. This would be my first investment in a mobile home park and I am skeptical about the ability to introduce 8 new homes into this type of market. Any feedback on those with a similar experience would be greatly appreciated!
Are you referring to buying the homes yourself and renting them or you would be looking for customers to rent lots and bring their own new homes?
How much is acreage around there? ie, if someone wanted to buy a couple acres of land and put a mobile on it, is that pretty cheap or is land expensive? The question to be answered is why would someone want to put a home in this park?
Too small (asset and market). I would pass. Remember, problem on the buy side can be a problem on the sell side.
There are a number of potential issues. Is the town's population growing, stable or shrinking? As if the last one, it would be a hard pass for me. After that, how old is the park and how big are the lots? Is it something that was designed for older homes or can it accommodate newer home sizes?
After that, it depends. As I'm aware of one guy that used to own a MHP in Ia (in a city 2-3 times what you are looking at) and to my knowledge, he didn't have any particular issue filling them up. But then, that town had a stable population and a manufacturing base (so there were jobs and people needing housing).
Do test ads first to test out the demand. That’s what I would do first. Then if the test ads show there’s a demand for people who want to rent a mobile home or own it and pay for just lot rent then you got a good park on your hands.
FYI: 21st Mortgage has a program called the Cash Program that can fill ten or more vacant lots with all new mobile homes. And ultimately the park owner doesn’t pay for the homes. The tenant / buyer will pay for the home payments through 21st Mortgages financing plans. It won’t work if you have less than ten vacant lots though.
#2 Mobile Home Park Investing Contributor
- San Antonio, TX
@Brady Allen You may want to talk to a few mobile home dealerships in the area. See how business is doing. Usually they can give you a good idea of the demand in the area since they are in the business of selling new mobile homes. Also, check with the local chamber of commerce to see if there is any economic development and/or businesses planning to come into the area in the future. Hope that helps!
@Brady Allen I bought a park in a very similar market. It had 22 spaces, 15 were filled no POH. Surrounding town was 2,200. The town is in the middle of being revamped. Affordable housing was not easy to find. Plus this park was so run down. We cleaned up after take over. Tore down a few abandoned homes. Hired lawn care, put up new sign. Forced home owners to repair their homes. Because the town and state allowed us to do so, we’ve filled all but one lot with RVs. They’re all older and retired, just wanted an affordable place to setup.
Check the towns laws on mobile home parks and what’s allowed. Could be an option. Plus it’s a minimal costs to prep a pad for an RV.
Lot rent was super low also. At 100.00 a month, we took the homes to 150.00 . All RVs coming in are 200. They have no problem paying, since the closest campground charges 400.00 a month plus utilities. Ours will keep going up as we keep improving Park.
Good Luck