Mobile Home Park DUE DILIGENCE Take Aways & MISTAKES OF NON-PROFESSIONAL LANDLORDS

[Logan M.]

Value Add Mobile Home Park, 2 Single Family Homes, 9 Park owned mobile homes, and 3 vacant spaces.

Yesterday, I spent my day walking through this mobile home park located in Utah. It had been on the market a long time, the buyer bought it in 2020 sight unseen. 

They invested a lot of money into new electrical infrastructure and renovations. 

Because of their poor management, they had nightmare after nightmare.

In a two-year period of time, they had two park-owned homes burn down, a sex offender move in, high vacancy, multiple abandoned cars and to top it all off like most GURUS they believed they could effectively manage a mobile home park five hours from their home with no systems in place.

For example, I asked the owner, "How much do you pay the handyman for the work he has done for you?" He replied, "I just pay him whatever he invoices me".....................................................

Here are my three observed takeaways on MISTAKES OF NON-PROFESSIONAL LANDLORDS

1. Systems protect your asset from value loss, they ensure a standard is kept.

2. Landscaping clean-up is one of the most inexpensive, lowest-skilled improvements a MHP can receive but it can make the biggest difference. If you view the photo I attached this is just one example that I saw. Home after home covered in weeds, wild roses, and Chinese Elms (The worst tree on Earth)

3. Your profit is directly tied to your ability to renovate, rent, and receive rent. Don't overcomplicate this.

Top 3 Mobile Home Park DUE DILIGENCE Take Aways

1. It was apparent that the owner had not been to the community in months.

2. The owner knew about as much about that community as I did, but by the time I left I probably knew more than he did.

3. The community needs a major clean-up but many of the tenants would be willing to pay more if they saw their money going towards something.

Every time I walk through mobile home parks I learn more about what pain I am willing to go through and if I have the guts to make the project successful.

By the way, this community is being seller financed with almost nothing down.

[Frank Rolfe]

Any mobile home park has five key categories of focus:

Infrastructure

Density

Economics

Age of Homes

Location

Due diligence needs to focus on all of these. Most parks score poorly in at least one category and therefore needs the others to score above-average to offset. For example, an older park will often have a good location (because it was built in the heart of town 50 years ago) but that age will result in a lower score on infrastructure, density and age of homes. Determining the sustainable of each attribute and if, when added together, the merits of each of these five factors makes the park compelling to buy is the main job of due diligence.