Sm. Mobile home park 50/50 units owned worth it?

4 Replies

I'm really not sure how you expect anybody to help you with so little information.  When evaluating mobile home parks you would need to know about market value of current homes, are they single wide, double wide, is the park 100% full, are the utilities public or private, if private are they in good working order, what are market rents for homes in the area, what are rents for apartments, how much is the lot rent, how much are they paying in rent on each home for the 50% currently owned by the park, is it in a good market, are the rents being paid at market, are the lot rents at or below market, what are the real estate taxes, is there rent control, what capital improvements are needed for the park, etc...

Hi @Terry Howard . Great question! I’ve started my third decade of investing in real estate full-time. Mobile home parks are my favorite investment on the planet. But mobile homes are my absolute least favorite investment.

Owning the mobile homes can be a nightmare and renting them out would likely bring you a world of maintenance and tenant and eviction hassles you would never want. The only way I would do this deal is if you had a clear plan to sell the mobile homes to the tenants very quickly. Happy Investing! 

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Mostly agree with @Paul Moore ---If you're going to go 50/50 make sure you do your research.  Don't cut corners during the feasibility period.

I recently purchased a park with 9 pads (room for 4 more).  Six of the units are park owned, one pad is empty.  Most of the current tenants are long term.

The biggest factors for me for the purchase were:
- A property manager:  Be selective and pay them well.  The previous owner was a DIY guy--not my jam.
- Trash Services:  The previous owner made the tenants take their own trash to the landfill.  That made for some interesting walk-through experiences during the feasibility period.  This is illegal in our state but only one tenant knew the law and made the landlord handle the trash.  I provide the trash service at no additional cost to the tenants, it's pretty cheap in our area.  They are happier and I have seen the tenants really clean up their units.
- Landscaping:  The previous owner did a good job enforcing lawn care as well as clutter.  I didn't want that hassle.  Didn't cost much to hire someone locally and they do a good job.  Additionally, when I hired him I requested that he report any issues that would make his job more difficult (e.g. clutter to mow around).  He also lets me know if he sees anything of concern.  He is a part of the property manager's team.
- Maintenance:  The old units break down all the time and the previous "handy" man was unskilled, unlicensed and uninsured.  Lot of do-overs to move past.
  -- I factored in high maintenance costs because I want the job done once and done right.  The new contractor is a part of my property manager's team.  He's skilled in mobile home park work and is licensed, bonded and insured.
- Cap Ex:  100% deferred for decades.  That is where the seller took the biggest hit in my offer price.  Units have good bones for the most part.
- Market:  Demand is high for affordable housing and my rents are below market, for now.  Current tenants are long-term.
- Location:  Quiet area.  Outside of town by a few miles so it feels rural.  Beautiful property with creek, big trees, rolling hills.  Excellent place for low income tenants--and they let me know as much.  The park is by far better than any park in the area and better than most I've seen advertised.  Location and ambiance drove up the price in the mind of the Seller but I based my purchase price on numbers vs sentiment.

The reason I like owning the homes is so that I can replace or rehab them on my terms.  I take care of my things better than most.