Mobile home parks : lot rent vs park owned

8 Replies

Hi Bigger Pockets family, first time poster long time lurker. I am closing on my first brrrr SFH rental in a few days. The house comes with 5 acres. I had originally intended on breaking it off and selling it to help fund another deal, but now am tossing around turning it into a mobile home park. I could fit about 30 pads on the property, and it is located a short distance from a major employer for the area. Ideally I would like to go the lot rent route, but finding a dealer or lender that would finance a mobile home for a potential renter without owning the land is almost impossible. I could go the park owned route, but I would have to go with dated mobile homes if I did that. Capex on 30 dated trailers is a bit more than I want to take on. Does anyone have any experience in this area or any creative solutions?

People like trailer parks because they are low maintenance. No leaking toilets, replacing carpet, etc. It's the cheapest option up front, gets you the best return, and requires the least amount of work to maintain.

Check zoning to determine if a mobile home park is allowed there. Also, check minimum lot size and street frontage as you may need to carve the mobile home park out of the existing lot versus pile onto the existing lot, so if you are trying to preserve the existing structure, you may lose some lots considering setback requirements and access.

Your local government may require public water and sewer for a new mobile home park, so be sure to check the requirements and distance to the nearest connections.

@Wes Jelen first of all, your idea to sell off the 5 acres will likely be smarter than developing a park. Not to discourage you, but it would be a lot simpler and likely more profitable to sell the land and use the proceeds to buy an existing park. Development of a park is a LOT of work and includes a LOT of uncertainties. Zoning approval, neighborhood pushback, utility approvals, flood control, offsite street improvements may be required, engineering, etc. When you put all the time and money into getting the property to "shovel ready" status, you still have to build the park. Once that is done, you still have to buy homes, move them, set them up, renovate them (unless you buy new ones) market them, and sell them. Only then will you have the recession resistant income MHP owners love. That's a LOT of uncertainty, time, and money and is the reason why new parks are rarely built, even by some of the wealthiest and most powerful park owners in the country.

As it relates to lot rent vs park owned, the beauty of mobile home parks as an investment, is their ability to deliver predictable cash flow, regardless of what chaos is going on around us. The reason why that cash flow is predictable is because the residents own their homes. With a park owned rental, the tenant can simply leave anytime they want and there is no vested interest in them staying. If a rental unit down the street comes available that is more attractive, there is nothing to keep them from moving. Conversely, if the home is owned by the resident, they are not going to walk away from their home that is worth 20-50k. What we are really discussing here is the underlying perspective of the tenant. Renters see their housing as a temporary solution. Owners see their housing as a permanent solution. Renters move. Owners don't. (or at least they move less often)

If you are seeking predictable and stable income, choose to have all the homes owned by the residents who only pay you lot rent. If you are seeking high turnover, high maintenance, but the potential for higher income, choose park owned rentals. And to be completely candid, if you really want to rent units, apartments would be a better choice.  

All the best,


@Wes Jelen Before you go forward with your plans, you'll have to check with zoning to see the land that you have allows for that. Be sure to have the exact parcel number and legal description. They should be able to look it up once you provide that information to them. From there, they should be able to tell you what you can and can't do with that piece of land. 

Ask them what limitations and stipulations there are, if permitted to continue with your plans for that piece of land. If you have to apply or re-zone, ask them about the procedure and what exactly is involved. 

Hope that helps. Good luck! 

Thanks everybody for the very detailed responses. I did check into zoning and there is absolutely no zoning for that area, but I did run into some other unforeseen issues. Closing on the property has been pushed several weeks and the issue will likely have an impact on cash flow in the long term. I have decided I will likely flip this one to amplify my money, as David Greene suggests, and move on to the next deal.