Selling Mobile Home to Tenants

10 Replies

Hi Bigger Pockets!

I’m hoping to get some advice on how to structure the sale of mobile homes to several tenants at a MHP in Wyoming. 

What I'm trying to accomplish is 2 fold; a higher NOI on the land portion of a MHP and a more affordable monthly payment for the tenants. I don't want to set the tenants up for failure with a bunch of differed maintenance and I also want an aesthetically pleasing park, so I'm in the process of a rehab.

I'm willing to finance all of the trailers to the tenants on terms that would make the monthly payment + their lot rent the same as, or less than market rent. They get a nicer place for the same or less and pay down principal, I don't have to deal with much turnover or maintenance and the land portion gets a higher NOI.

I want to set this up with the ultimate goal of selling the park next year, but keeping the seller carry notes and continuing to receive payments on those. My question is, does anyone have experience with a structure like this? Any advice on how to set this up as far as leases for lots, seller carry vs contract for deed, park rules ect?

I have an attorney I’m going to work with on this, but just wanted to see if there is anyone out there with first hand experience. 


@Karen Hamblet I don't know if there is going to be a cash buyer out there, but I don't see why it needs to be cash.  It will be an 8 cap MHP with no park owned homes which is competitive, so I would imagine there are several buyers out there and if not I'd be content keeping it. 

@Nathan H. look into the rent credit program.  You have to be careful when selling mobile homes on a rent to own (possibly illegal).  Frank Rolfe has a great bootcamp that you can take and learn all about it and much more.  If you want more info about the rent credit program feel free to reach out as we have a number of residents currently on this program with us. 

@Nathan H. If you're planning to owner finance the homes, you can always look into working with a licensed mortgage loan originator (LMLO). They'll take care of all of the paperwork and can help you through the process. You may want to talk to a few mobile home park owners and/or dealerships. They may have a few referrals for you on who you can use. Hope that helps! 

@Rachel H. Thank you for the suggestion. I actually am an MLO, but what I'm struggling with is loan vs. contract for deed and how to protect myself and the new owner if the tenant defaults on lot rent, trailer payment or both. I live in Colorado and the park is in Wyoming, so I'm not totally familiar with the laws.  

@Caleb VanTimmeren Thanks Caleb, I'll look into that. 

Thanks for posting.   Couple things here:

Financing - bear in mind, if you finance them and default occurs, you will then need to foreclose (lengthy process, 6-9 mos++ in some areas, if not much longer).  Consider rent with option as alternative.

And why would you EVER want to sell an MHP?!  Unless of course the numbers just don't work.  But, typically when you buy right, these things CF like mad.  Very little other types of RE can compare.

@Dave Rav Thanks for the response! I don’t know the answer to this, especially the state specific one.. But would this be a foreclosure, repossession or something else? 

There is no deed and it would be secured with a UCC security agreement as is the norm with mobile homes, not a mortgage or deed of trust. I simply have a title, just like a car has. 

I bought this property distressed for about 400k in a 1031 exchange. It has been a significant value add project so I have about $1.2m in equity. That equity needs to be leveraged with a bigger principal balance than is appropriate for a park of this size. But you’re absolutely right, mobile home parks are monsters! There’s just a better owner for this one than myself (know anyone?!). I love the SC market btw 

Also, the reason I don’t want to do rent to own is I feel like that would complicate things when I sell the land. Not sure though, maybe it would be ok

@Nathan H. thanks for the reply.  Good point on the foreclosure vs repo topic.  After I posted, I thought about this.  It may actually fall under repossession (as you do have a title).  In the state of SC, MHs are treated similarly to cars in that they have titles and are processed by the DMV.  

I guess the question for you is - does a repo take as long as (and is more complex than) processing an eviction?  Again, the answer is certainly state specific, compounded further more by the pandemic.  During the pandemic, some states allow folks to "live for free" and dont enforce evictions, and unfortunately some abuse this.  Fortunately for me, I reside in a conservative state that stands behind basic rules and principles.  After all, if the govt really cared they would allow for relief from paying mortgages, right?  If anyone can afford not to get paid, the big banks can!  I digress..

I see you purchased this property in a 1031.  I have never done one, and you likely know more about 1031s than I do.  What are the repercussions if you end up keeping the property long-term?  If you can keep the property, to harness that equity you can just do a cashout refi.

As for doing an RTO, I see your point when it comes to selling. The RTO is a great strategy for the buy and hold investment, but if you plan to sell soon it may cause complexity.

All the best!

@Nathan H. it would be good for you to talk to an experienced MH attorney in Wyoming. What you are considering will be governed by both Federal and State regulations so a conversation with a local attorney would be valuable. Best place to start would be the Wyoming Manufactured Housing Association as they will know all the MH attorneys. Their number is (307) 857-6001


There will likely be regulations related to you being a dealer as well as the loan origination side. Some of the creative ways you can execute that strategy with a single family home may not be legal inside a park. Since you desire to sell the park, you will want to know where the legal fences are at so you don't go through all that work to find out you have stepped over the fence.  Guidance from an experienced MH attorney will be well worth the time & expense.  

@Nathan H. I am a broker that specializes in Manufactured Housing and something that I've noticed in selling parks where a portion of the home inventory is RTO is that it can be tricky for a buyer and seller to agree on value. For example, the title for a traditional park owned home lies in the hands of the park owner. If a new buyer is taking over the titles on all POHs and RTOs when they buy the park and a resident is close to paying off their home (let's say $1,000 left in payments on a $10,000 home) but defaults, then the new owner owns a POH that they can turn around and sell that home for more than they paid for the scheduled home payment collections. But, as a buyer, you're not going to want to pay more than $1,000 for the title to that RTO home because the resident will likely complete their payments and become the rightful owner of the home.

Just some theory that I thought I'd share. I hope that it was relevant and made sense. 

Regarding an action plan, I'm thinking that it'd be a good idea to sell the land and not include the RTO homes in that sale. You continue to collect home payments ONLY while the new park owner is collecting lot rent. In the off chance that the resident defaults, then the new park owner can then purchase the home FROM YOU. Just my two cents.

How many lots is the park?