3 Red Flags Concerning Mobile Home Parks To Consider Before Investing

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If the headline of this article is confusing allow me to clear up the issue now. This article is designed to help provide the newbie mobile home investor with some foresight to notice some not-too-common red flags that you will find while investing in individual mobile homes inside of pre-existing mobile home communities.

The three red flags below have all been costly mistakes that I have made myself over the past decade investing in these homes.  Some of these mistakes I am still living with now as some homes are still located in these less-than-ideal parks.

After reading the list below please keep these items in the very back of your mind in the event you find yourself looking at purchasing a mobile home inside one of these types of communities.

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1.) A Large Number of Empty Pads/Lots

Imagine you are driving through an established mobile home community you have never been through before. You notice that approximately 25% or more of the existing pads are vacant and without mobile homes on them.

This could be for a number of reasons.

A. Transitional Period: This mobile home park could just have kicked out a majority of the less desirable owners and/or homes in the park, thereby cleaning up the quality of the park. This happens when new management or ownership takes control of a loosely operated park. After asking the manager about the issue she confirms this is the reason. If this is the case there is little to be concerned about. It is a good question to inquire how they plan to fill these empty pads however no red flags are raised here.

B. Poor Ownership and/or Management: Another reason there could be a healthy amount of empty mobile home pads is due to homeowners moving their mobile homes out of the park. I have only seen this twice. The community residents logically and almost unanimously despise the park manager and/or owner to an extent the mobile home residents are willing to pay to have their mobile homes moved out of a park they have lived in for years. If a park manager is too strict, bossy, demanding, or the park owner is too negligent or greedy with regards to raising lot rent prices you could have a mass exodus in a community.  If you get this impression from a resident or park manager strongly reconsider a long-term relationship within this park. This is a red flag.

2.) Too Strict of an Application Process

Screening buyers and residents for past evictions, credit worthiness, criminal history, sexual predator status, income, employment, etc is all within a park’s rights as landlords and without question should be performed as due diligence by any investor allowing strangers into their properties. When dealing with mobile homes inside a mobile home community it is important to note that each park owner may dictate within reason who lives within their walls. This screening criteria will translate into who you can resell your investment mobile home to.

In the beginning of my career I invested in a mobile home community that required a minimum credit beacon score of 700 to be approved to live in the park. This is an insanely high beacon score for everyone to reach in a mobile home park. The community also required a 4 page application that detailed employment verification for the past 4 years, past housing, references, bank information, automobile information, etc. Much of this information is standard and will be asked for when applying to almost any mobile home park. However the high credit score, 4 page application, and $75 application fee per adult made this investment home terribly difficult to resell.

The mobile home spoke for itself and was a beautiful investment purchased for a nominal price. I had no shortage of potential buyers wanting the home. The trouble came after the potential buyers left my investment and headed to the park. Once finding out about the high criteria and high application fee the park demanded few ever followed through with an application. After 2 month of holding the home I began offering to pay for “verbally-qualified” buyers to run their applications. I paid for 6 application fees before a family of 2 was approve for the park. I took a discount on the home when I resold it, collected my profits and have never done business in this park again.

Important to note was that I met a number of other sellers that were having the same complaint about selling their homes. I could have purchased more homes within that park for a true discount however the hassle and time would have not been worth the immediate savings.

3.) Snippy or Unfriendly Park Manager

Park managers are average people just like you and me. In addition they often times have thankless jobs and give much of themselves to the local community. I say this completely serious because the majority of mobile home park managers want nothing more than to do a good job and to bring up the lives of the residents in their community.

If you meet a park manager most of the time they will be as pleasant and helpful as an old friend. However sometimes park managers wake up on the wrong sides of the bed, this happens to the best of us and can lead to a less than desirable first impression. When meeting a park manager for the first time be aware that you are screening this person just as you screen an investment home or seller. You will be forming a relationship with this park representative and it is important you both like each other.

Without meeting the manager a few times it is difficult to say whether or not he or she is always happy, rude, greedy, bossy, etc. Instead plan to interact with the park manager at least 3 times before you purchase a mobile home within their community.

Conclusion

In conclusion there are many moving parts to every decision that goes into whether or not you should invest in any income producing property. When a mobile home is located in a mobile home community this only adds to the variable of factors to consider. If you have further specific or general questions do not hesitate to reach out and ask them below.

Photo: Sweet Evie

About Author

John Fedro

John Fedro has been investing in manufactured housing since 2002. John now spends his time continuing to build his cash-flow business in multiple states while helping others enjoy the same freedom he has achieved. Find John here.

6 Comments

  1. I’d add that the general condition of the mobile home park could be a red flag… Kind of obvious. But I’ve seen some parks that have knee high weeds in the common areas, streets need paved, etc. Good money can be made in mobile home parks though. Recently a group of investors bought a mobile park here in Bend that they planned on evacuating, bulldozing, and developing a stick built community on. While in the process of going through the city hoops, they realized that this park was a great thing for the community. They chose to keep the park as is, after realizing that it makes great money and is a better long term investment than building a new community over the park grounds.

    55 and older parks are in demand here, as they tend to have more owner occupied units, less vacancy rate, and typically well qualified tenants. I know an investor that recently has been buying only 55 and older parks throughout the NW.

  2. The near in parks around Atlanta have all (mostly) gone corporate and they don’t allow investors to flip MHs in their parks. The next step after reading Lonnie Deals is to talk at length with the park managers and make sure you can even do deals in the park.

    We have moved to flipping double wides on their own titled land. I just don’t see enough profit here in GA to do individual mobile homes on rented land. We rent to own double wides on land for a year and then owner finance on a 10 yr note all Dodd Frank compliant. Since the property is titled like a stick built my view is that Dodd Frank doesn’t forbid selling like this new law (Jan 14, 2014) does for MHs on rented land. Folks selling MHs in parks need to read up on Dodd Frank!

    • Hi Curt,

      Thanks for commenting. Please see my thoughts below. I have notated your words with a “C” and my words with a “J”.

      C – The near in parks around Atlanta have all (mostly) gone corporate and they don’t allow investors to flip MHs in their parks.

      J – This is not the findings that we are having in this current market. Corporate parks or mom and pop type parks will happily allow us inside their walls. The minority that do not want us there are investing in homes themselves or have been burned in the past by a different investor and fear the same happening again, these latter parks may still allow us in down the road. Perhaps all (most) park managers do not allow you inside due to some other reasons.

      C – The next step after reading Lonnie Deals is to talk at length with the park managers and make sure you can even do deals in the park.

      J – Right on. I would not say it is the very next thing but it is on the to-do list for certain.

      C – We have moved to flipping double wides on their own titled land. I just don’t see enough profit here in GA to do individual mobile homes on rented land.

      J – We aim for a $300 minimum cash flow per month and get it, or we simply don’t do the deal. Glad you have found something that you love and that works for you. Keep up the great work Curt!

      C – We rent to own double wides on land for a year and then owner finance on a 10 yr note all Dodd Frank compliant. Since the property is titled like a stick built my view is that Dodd Frank doesn’t forbid selling like this new law (Jan 14, 2014) does for MHs on rented land. Folks selling MHs in parks need to read up on Dodd Frank!

      J – We do not rent to own. I agree anyone getting started in any form of seller financed sale should understand the new laws and what impact it will have on their business. With your safety in mind I would advise that you double check your information with regards to a mobile home on real property fitting the criteria of the dodd frank act. Mobile homes on rented land and/or on your own land (in addition to all residential SFRs, condos, town homes, house boats, etc are included) that you sell by extending financing to a buyer falls under the scope of the rules. However, like I believe you alluded to using a RMLO and closing attorney should help you curb your risk.

      Hope this helps.

      All the best,
      John Fedro

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