Mobile Home Park

12 Replies

Hello all and great day! I'm considering buying a mobile home park on a seller finance. What are some things i should be aware of? I have multi-family property, but have no knowledge about mobile home parks. Any input is appreciated!

I guess the first step would be to tackle the valuation of the park.  Parks are evaluated by three separate methods for each operation:

1. The land lease component is valued on an income approach. Your CAP rate will vary based on risk.

2.  The homes are valued at their physical value - do not take an income approach with these.

3.  Notes are given a discount rate.  This will vary based on time left to mature and the underwriting that went into them.

Next, you need to take an inventory of the infrastructure.  This includes the water, sewer, roads, electricity, gas, etc.

Then, you will need to take a look at the area.  City-Data is a very good resource for this.  You will want to look at unemployment rate, crime rate, vacant housing rate, apartment rents, median income, median home prices, etc.  On this part of it you want to statistically prove that the area is economically sound and that the homes in your park are not in competition with other forms of housing.

After that, I would take a look at your tenant base and market.  You will want to get a handle on the process the previous owner used to vet tenants.  This is especially important on your park owned homes and notes.  You will also want to do some test marketing throughout your diligence to gauge the demand.

Just to keep this from getting too drawn out, I could probably help you more if I knew a little bit about the statistics of that area, the resident break down (#lots, #occupied, #of POHs, #of notes, Lot rent amount, etc.), and breakdown of the utilities and who pays.  

The best advice I can give is not to try to bullet point into one post a whole boot camp on mobile home parks, commercial contracts, Due dilligence on commercial/parks etc etc.

Buy the 30 day due diligence package from Frank And Daves off

http://mobilehomeuniversity.com

My team went to the face to face boot camp and it's more then worth it, almost priceless for the face to face and Frank's incredible stories of screening parks and making offers.

I've posted alot on this topic in the " mobile home" forum.  This is not posted in the mobile home forum.  Go there and read the many park deal analysis threads.

The park has 12 units (9 occupied) and two commercial buildings (not leased). There are 10 park owned trailers and one duplex. The lot rent is $450.00, the duplex rents for $350/side. Two trailers are vacant, one side of the duplex is vacant. Crime is pretty bad in the area from what I've been told. The owner has a loan for approx. 35k on the property he used to help his daughter. There are street lights that the owner pays the electric bill for (approx. $50/month), tenants pay their own electric per unit. There are two septic tanks for the property. Water is paid by the current owner and he collects from the tenants. His record keeping is all in pen.... The parcel is about 4 acres and there is space for another trailer. I'm not sure of what POH is....

Alonzo biggest thing with a mobile home park is the LAND. Check if within county or city limits. Then go find the current and future land use map to see what the zoning is now and what it will be in the future.

You want to later sell out at a premium for residential or commercial development.

For crime check out a site like crimemapping etc. You see frequency of crimes in the immediate area and then if crimes are more violent or non-violent in nature. For instance in a 1 mile ring if all the activity is around the park then you have cleaning up to do. If the whole area with surrounding properties is also crime infested then it's more an area problem then a property or complex issue.

Mobile parks you will deal  many times with tougher tenants and have more turnover. I have never owned one but my mom's friend is in her late 70's and has owned many units for over 40 years.  

Alonzo, before oyu buy ANY mobile or parks read this book

This is probably the best real estate book out there, and its on mobiles.

This is based on buying/selling single units, not parks, but youll get  aplethora of knowledge on the parks, also a BP podcast on MH parks is available, google it 

WEALTH OF INFORMAITON

http://www.amazon.com/Mobile-Home-Wealth-Selling-R...

@Alonzo Avents , there is a lot of information out there about mobile home park due diligence. I would highly recommend listening to "Real Estate Investing for Cash Flow" podcasts by Kevin Bupp. He is strictly a mobile home park guy, but he brings in a lot of heavy hitters in the MHP industry as well as other related industries (finance, apartments, note buying, etc.).

IF the due diligence pans out (and please please make sure you're educated before diving into a mobile home park), TAKE THAT SELLER FINANCING AND RUN WITH IT! Seller financing is becoming harder to come by these days, so if you can get it, run with it.

Depending on your investment criteria, I may have a park for sale soon that could interest you.

Originally posted by @Nicholas Moffett :

Alonzo, before oyu buy ANY mobile or parks read this book

This is probably the best real estate book out there, and its on mobiles.

This is based on buying/selling single units, not parks, but youll get  aplethora of knowledge on the parks, also a BP podcast on MH parks is available, google it 

WEALTH OF INFORMAITON

http://www.amazon.com/Mobile-Home-Wealth-Selling-R...

 Hi, would you mind reposting the name of that book?  I can't find it, based on the  shortening. Maybe bp did that  that for some reason?  

@Dawn Young

Not sure if you did his or not but I thought I would post it for general consumption.

I did the search for 

Mobile-Home-Wealth-Selling

The following came up and it fits the description that Nicholas gives. Though I am not CERTAIN it is the book he is referring to. 

http://www.amazon.com/Mobile-Home-Wealth-Selling-R...

In case the link does not work the book is:

Mobile home wealth: how to make money buying, selling and renting mobile homes by Zalman Velvel