Redeveloping a mobile home park

Mobile Home Park Investing
12yFollow

Redeveloping a mobile home park

Christian CarsonPro Member
Cleveland, OH · Member since 2011 · 400 posts · 223 votes

Hello fellow investors,

I have an opportunity to purchase a large, 100+ unit mobile home park. The 28 acres it sits on is highly valuable land, the park is dilapidated, and the owners are behind on taxes. The city has been trying for years to get rid of it and merge it into the public park next door, but I suspect the highest and best use is a SFH development.

As I know little about MHPs, I would like to reach out to those of you who are experienced in dealing with them and what pitfalls to expect. Specifically I'm wondering about the following:

- How long is a typical mobile home lot lease?
- Would eviction be an option?
- How costly is it to dispose of an abandoned mobile home?
- Are there any other pitfalls to remediating the land for redevelopment into quarter-acre lots? Environmental considerations?

This sounds like a difficult task, but the potential is high due to its being adjacent to a beach and nestled between two public parks. It's now a matter of determining how much it will cost to clear the land and how long it will take to get all the units off the land.

I'd love to hear from anyone who has done something like this before!

Thanks

0Reply
43 views

Most Popular Reply

Matt B.
Investor · Vincennes, IN · Member since 2013 · 223 posts · 108 votes
12y

As park owners ourselves, I am curious as to why you would want to redevelop it into something else? Would there be that much more upside to it as opposed to just repositioning the park? Since the infrastructure is already in place and in close proximity to beach and parks, you may have a greater potential return with less headaches by creating a nicer community with potential rv space.

That being said, to answer your questions:

-You will need to see the actual leases(all of them) to really know how long they are. Typically they are 1 year or month to month, unless they are on some sort of seller financing arrangement. You have to watch out for the previous owners grandmother that has a 20 year lease at $50 a month.

-Eviction is an option, but it would be simpler on you if you could work something out with another park owner to take your tenants. A win for you, the park owner and the tenant. Also, you won't look as much like the bad guy kicking poor people out to make a fancy development.

-Abandoned homes can usually be sold or given away for free. Again look for another park owner that wants them.

-Not sure of other pitfalls. You will want a phase 1 environmental study either way.

Much success to you whatever route you take.

1Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Jimmy MoncriefPro Member
    Chattanooga, TN · Member since 2010 · 319 posts · 100 votes
    12y

    No clue about this - but @Aaron Kinney is the expert! You should message him.

    Podcast Guest on Show #55
    0Reply
  • Belinda Lopez
    Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes
    12y

    That sounds like a great opportunity if you are in it for the long haul. The quickest way to clear the park would be to offer to pay to have the homes moved; price will vary depending on what part of the country you are in and if the homes are single or double wides. Most leases have a 30 day 'get out' clause so owners can remove troublesome tenants. Even if the home stays, the offender has to go. Ask the owners for copies of the current lease form.

    Evictions are another path but you need to have grounds for a proper eviction and again, you might be able to evict the person but you still have the homes. Are the homes all park owned or owner-occupied?

    Disposing of old mobile home is not cheap either you can partner with a local scrapper and they may be willing to do most the work for you. You'd be surprised at what folks are willing to buy so before you scrap them, try selling them outright and let the new owner move them out. Once word gets around that you are closing the park, owners will start scrambling for options. As a new owner, you will have to honor their leases for the remaining time period but you can make changes that highly encourage them to start moving.

    If you're concerned about environmental issues, you can get an environmental study done; they can be a simple Phase 1 or more advanced report each going up in price. If you are located on any wetlands or other sensitive area then there might be additional limitations on building in those areas. You'll want to become fast friends with the local zoning and permit authorities as they will have the final say on what you develop on the land. Make sure your option in the purchase agreement is contingent upon you being able to find this out before you buy the property.

    Good luck and keep us posted!

    0Reply
  • Matt B.
    Investor · Vincennes, IN · Member since 2013 · 223 posts · 108 votes
    12y

    As park owners ourselves, I am curious as to why you would want to redevelop it into something else? Would there be that much more upside to it as opposed to just repositioning the park? Since the infrastructure is already in place and in close proximity to beach and parks, you may have a greater potential return with less headaches by creating a nicer community with potential rv space.

    That being said, to answer your questions:

    -You will need to see the actual leases(all of them) to really know how long they are. Typically they are 1 year or month to month, unless they are on some sort of seller financing arrangement. You have to watch out for the previous owners grandmother that has a 20 year lease at $50 a month.

    -Eviction is an option, but it would be simpler on you if you could work something out with another park owner to take your tenants. A win for you, the park owner and the tenant. Also, you won't look as much like the bad guy kicking poor people out to make a fancy development.

    -Abandoned homes can usually be sold or given away for free. Again look for another park owner that wants them.

    -Not sure of other pitfalls. You will want a phase 1 environmental study either way.

    Much success to you whatever route you take.

    1Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    @Christian Carson , the part I picked upon was that the city has been trying to get it out of there. This is a great "secret weapon", go to the city planning office and inquire about it. What would they like to see in there?

    Doing anything like 28 acres in town will be a political issue. Let's not jump to conclusions as to the highest an best use, but you may well be right. Here, we are getting a Hilton at the edge of a residential area, another new nicer motel in a residential area, multi-family is another buffer property.

    The city will be looking for the highest use with the best tax basis. If you get them on your side there are many ways to "partner" with them in getting things done. I've been involved in redevelopment, one being an old MH park that was turned into a park.

    Look at the bigger picture of the area, traffic routes, zoning, recreational areas and determine highest and best use options, select your preference and see the city planners.

    Now, it could be the city just wants it cleaned up and it's at its highest and best use. Again, using the city can let them wear the black hat. Getting rid of MHs, like Matt said, should be no problem. It could take time to weed out bad tenants or those unable or unwilling to change. I'm sure you can figure that out by changing lease terms, rents and terms.

    Keep us posted! :)

    0Reply
  • Edward Hamill
    Professional · Nokomis, FL · Member since 2013 · 123 posts · 99 votes
    12y

    If the community is "run down" and takes a higher than usual toll on the Polices' time, you can sometimes get the city to chip in with the relocation. At least that has worked with a few projects I have been involved in (had one where the town actually paid 100% of the removal and relocation costs in Bradenton FL due to the fact that 40% of all police calls in that district were for that 1 community).

    Also, check with your states Manufactured Housing Association (most states have them, I think yours is called "Ohio Manufactured Home Assoc " rather than "Housing") . Often they have a relocation program to help move older homes out, but ONLY if you are committed to replacing with newer Manufactured Homes, which there is good money in!

    Many communities have "autorenewing leases" or "99 year leases" so you may have an uphill battle. Best bet is to keep the area zoned as is and try and upgrade the community...like @Matt B. suggested.

    0Reply
  • Christian CarsonPro Member
    OP
    Cleveland, OH · Member since 2011 · 400 posts · 223 votes
    12y

    @Matt B.: There's a major stigma associated with mobile homes in this area. It's seen as a country thing, but this park is located in the middle of the city, where single-family homes can be purchased at a price point of $60k-$100k in the same general area. I'm going to guess that the only target demographic is going to be low-income retirees. The market for these kinds of places has really bottomed out in recent years due to the loss of low-skilled blue collar jobs in the area. The people with steady incomes, generally, can afford SFHs.

    @Bill Gulley They make it easy here to redevelop. I've identified certain city incentives for carrying out this kind of redevelopment that would really boost the bottom line to this kind of project. I like the idea of lobbying them to help relocate residents; I think certain nonprofits might step up to do that. I've already had dealings with the local CDC, whose number one goal is to clean up this area.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Yes, non-profits can step up, like Habitat for Humanity, but they won't be quick as they have qualifying periods. Others may provide temp housing or contact the housing authority too. Don't know what use you may have in mind, but the more support you can muster to be involved, the better actually. Just beware of turf issues and overlapping non-profit services, go with the largest one that has a broad reach. Don't overlook tax credits, redevelopment funds in target areas, low interest loans and the Community Reinvestment Act as to bank lending. :)

    0Reply
  • Marc Faulkner
    Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
    12y

    I have seen it done here in Kalamazoo to a couple of different parks. One was bought out by Western Michigan University because it touched on property that they already owned. They wanted to(and did) let the property go back to nature. All of the leases had expired (which is most likely the case with the park you are looking at) so they simply gave a 60 day notice.

    Most people just left and left their mobile homes behind. There was some bad publicity with the news because a few of the residents owned halfway decent homes and, did not have the money or means to move them. Another park stepped in and offered to move those folks for free. None of the residents had the funds to make much of a stink and the city wanted the parks gone as well.

    With the park that the college bought, the homes were sold (real cheap) to me and, we relocated the homes that were worth anything and junked the rest. This cost the new property owner nothing! We found a local farmer that took a few of the junkers and scrap yards to take the rest. We had to pay for the moving costs. One scrap yard charged us $300 and the other took a few of them at no cost. You can expect to pay between $500 and $750 to get a single wide ready to move. It cost us $450 a home for the actual move and a $300 dump fee. On the expensive side, it cost us $1,500 to make a single wide mobile home go away.

    At the other park, they gave away any of the mobiles that anyone would haul away. They crushed the rest of them onsite with a bulldozer and hauled the scrap away in dumpsters. I think the operator paid about $2,000 per home for this. There is also a program here in Michigan, through the Manufactured Housing Association, that has access to dump sites for $400. As suggested above, you should check with the Ohio Association here:

    http://www.welcomehomeohio.com/

    0Reply
  • Ken Rishel
    Specialist · Springfield, IL · Member since 2011 · 700 posts · 479 votes
    12y

    You did not mention what state it is in. Some states have laws preventing you from just failing to renew leases and others will actually make you put money up to fund resident relocations.

    There are efforts underway in a number of states to actually require community owners to put money in relocation funds and some states that are already doing it. Either way if you simply throw residents out when their leases are up, you are going to make yourself very unpopular with community owners in that state. Even if the city wants the park closed, you need to know how the state will react.

    On top of that, land that has electric and water lines in place for every pad is going to create a problem for redevelopment and leave you with considerable cost to remove them. I have encountered vacant parks over the years that have not been cleared of these and they always lower the value of the land.

    If your plan is to buy it for back taxes, you should ask yourself why you are getting a good deal that others are ignoring. Manufactured housing communities are closely watched investments. While a 100+ community isn't a prime investment (it needs to be over 150 sites for that) if it is in Ohio as Marc suggests, there are many active operators who would be well aware of it that have interests in 100+ sites. If they aren't interested, that may be a warning sign.

    I would also consider Matt's suggestion very carefully. Manufactured Housing communities are normally cash cows as are well located RV parks. Sometimes an infusion of cash to rehab the community is all it takes. One of our clients bought a park that was empty of homes, had a swimming pool filled with dirt, and a trashed club house for a bargain that some other organization had bought for what they thought was a "higher use" and gave up because of the cost of ripping out the pads, the electric, the gas, and the water supplies and sanitary lines. He is selling 6-7 brand new multi sections a week using the infrastructure left behind as a major leg up in the process.

    Good Luck!

    0Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    12y

    My vote is with Gulley's point: find out specifically what the local municipality wants. Granted politics can and do change, I'd get a good handle on what the zoning czars want and get them to see you as the solution and the person to back, even support.

    Hey, now you're an urban redeveloper!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free