What do you look for in a mobile home investment?

Question

Hi guys! What do you y'all look for when looking for a mobile home rental investment? What are some important factor to take into consideration. Thank you!!!!

Rachel H. · Answer

@Jennifer Velez Definitely the neighborhood. When I first started out, I learned the hard way the importance of buying properties in areas I feel comfortable with that attract the type of clientele that work with my personality. If you're just starting out, I'd visit a few different mobile home communities and select the areas that you feel comfortable with. Learn your market and find out what types of people live there. See if these are the types of people that can work with your personality. Also, it's important to be on the same page with the park managers and/or owners of the communities you want to work in. Establish a relationship and continue to come back to visit the parks you'd like to work in. Over time you'll develop strong relationships. Hope that helps. Good luck!

Jack Martin · Answer

@Jennifer Velez  Without knowing what your goals are here are some of the criteria I look at and why:

• Location - when you acquire a park in a good location, it comes along with strong demand.  That is a critical part of a successful park.  If you don't have demand, it's really tough to make any meaningful progress.  Don't violate the old adage "Location, Location. Location"In or around a MSA of 30,000 people or moreWithin close proximity of a Walmart  (If Walmart won't go there, you shouldn't either)Sustainable economic drivers (employment for your residents)Entry level home values above 100k
• In or around a MSA of 30,000 people or more
• Within close proximity of a Walmart  (If Walmart won't go there, you shouldn't either)
• Sustainable economic drivers (employment for your residents)
• Entry level home values above 100k
• Size - depending on your operational strategy, I have found that larger parks tend to work better50 spaces or more if you plan to use an onsite management team (smaller than that will have a tough time affording a good onsite team)Smaller parks can be managed with a 3rd party, but keep in mind you can't really count on them to move the needle for you on items like filling vacant pads, renovating homes, selling homes, or any major capital improvements, so you should have a plan to handle those items.  Once a smaller park is completely stabilized, a 3rd party management solution can be a better fit.
• 50 spaces or more if you plan to use an onsite management team (smaller than that will have a tough time affording a good onsite team)
• Smaller parks can be managed with a 3rd party, but keep in mind you can't really count on them to move the needle for you on items like filling vacant pads, renovating homes, selling homes, or any major capital improvements, so you should have a plan to handle those items.  Once a smaller park is completely stabilized, a 3rd party management solution can be a better fit.
• Upside - every buyer may not be seeking upside, but I want to be able to improve the cash flow and the value of the park, so I always like to see some areas where I can influence the performance without requiring the market to give that to me.  Expenses that are higher than they should beIncome that is lower than it should beObvious signs of neglect, that when remedied, could allow income to go up
• Expenses that are higher than they should be
• Income that is lower than it should be
• Obvious signs of neglect, that when remedied, could allow income to go up
• Vacant spaces & POHs - Because I've been doing this for awhile and have systems in place to handle these items, I am not afraid of either one of them. However, if you are just getting into the business, it would be smart to start with a park with mostly TOHs and a small amount of vacant spaces.  
• Water & Sewer - Public utilities are easiest.  But if you are familiar with private utilities, they can be just fine.  Water - I have parks with private wells and private water companies, as well as city water.  It comes down to your familiarity and comfort level with private water.  This is important because you have a responsibility to provide water to your residents, so make sure you are comfortable with the system, the equipment, and the regulatory requirements that come along with it.Sewer - I have just as many parks with septic as I do with sewer.  If you understand how septic systems work (I grew up in that business as a kid) they are not as scary as many might think. I have never had a park with a lagoon and I never will.  Avoid lagoons.
• Water - I have parks with private wells and private water companies, as well as city water.  It comes down to your familiarity and comfort level with private water.  This is important because you have a responsibility to provide water to your residents, so make sure you are comfortable with the system, the equipment, and the regulatory requirements that come along with it.
• Sewer - I have just as many parks with septic as I do with sewer.  If you understand how septic systems work (I grew up in that business as a kid) they are not as scary as many might think. I have never had a park with a lagoon and I never will.  Avoid lagoons.
• Competition - I always like to drive all the parks in the area and see how this park will compare to the competition.  That helps me establish where the market is related to space rent, vacancy, homes for sale, and any other insight I can gain about the area.  How the surrounding parks are performing can tell a pretty good story about the market, demand, and the upside that may or may not be available.

• In or around a MSA of 30,000 people or more
• Within close proximity of a Walmart  (If Walmart won't go there, you shouldn't either)
• Sustainable economic drivers (employment for your residents)
• Entry level home values above 100k

• 50 spaces or more if you plan to use an onsite management team (smaller than that will have a tough time affording a good onsite team)
• Smaller parks can be managed with a 3rd party, but keep in mind you can't really count on them to move the needle for you on items like filling vacant pads, renovating homes, selling homes, or any major capital improvements, so you should have a plan to handle those items.  Once a smaller park is completely stabilized, a 3rd party management solution can be a better fit.

• Expenses that are higher than they should be
• Income that is lower than it should be
• Obvious signs of neglect, that when remedied, could allow income to go up

• Water - I have parks with private wells and private water companies, as well as city water.  It comes down to your familiarity and comfort level with private water.  This is important because you have a responsibility to provide water to your residents, so make sure you are comfortable with the system, the equipment, and the regulatory requirements that come along with it.
• Sewer - I have just as many parks with septic as I do with sewer.  If you understand how septic systems work (I grew up in that business as a kid) they are not as scary as many might think. I have never had a park with a lagoon and I never will.  Avoid lagoons.

All the best,

Jack

Alina Trigub · Answer

@Jennifer Velez

Are you looking to buy a mobile home or the full mhp?

Those are different investments. While location is pretty important for both, there’s a lot more that goes into researching the mhp.

For mhp considation, the important things are: state rental laws, condition of the park, number of pads, number of POH versus TOH, who’s responsible for utilities, what’s the value add opportunity, how much will the improvements cost, etc.

What do you look for in a mobile home investment?

Most Popular Reply