Mobile Home Park

[Rohit Jindal]

Hi All: I am looking at a mobile home park for investment. I have never invested in them so I have a few questions. Do they act the same was as multifamily homes from an investment point of view? As in, I have to manage just the land, and provide water, sewer, and trash coverage, and everything else is of the tenant? Also, how would I evict a tenant for not paying on time for renting of a pad? Is it the same process as serving a notice in a multifamily home? Are there any other differences that I should be aware of from an ongoing cost, investment, or management point of view? Any feedback would be appreciated! Thanks.

[Andrew Warner]

@Rohit Jindal MHPs are probably the safest investments. As a MHP broker here in AZ the only property owners who made out in the 2007 crash were MHP owners. Month to month is fine when renting out in a MHP since it costs several thousand dollars for tenant to move. 

A few things you should ask and be ready for:

Does the park use sewer or septic? City sewer is prefered and easier to deal with. Septic works as well but will be more of a hassle especially if you have minimal understanding of how septic systems work. If it has septic I highly recommend having the septic systems inspected during the due diligence process.

Walk the park and look at the homes. Are the single wides or double wides? Double wides are best and are preferred by lenders. Here in AZ lenders loan on parks only if they meet a minimal amount of double wides. Also how old are the homes? Older homes have rounded roofs, the newer ones have angled roofs like houses. Look to see how many for sale signs are in the park. If 10% of the mobiles are up for sell it means the rents are too high or there is an issue with management. If it is the rents I would not recommend buying the park. 

Research the rents for MHPs in the area and compare. If the rents in the park you are purchasing are lower then that is a good sign. Ask the seller to raise the rents before selling to you (that way you aren't the bad guy). It also means you can start raising the rents.

Look to see if the homes are individually metered for the park. If they are not and the park is paying utilities and just charging rent this is an opportunity. You can meter the homes for pretty cheap and increase your revenues and park value right away.

Also do you plan on managing this park yourself? If not make sure to calculate the manager's salary into your expenses. Small MHPs are not as profitable as bigger ones for this very reason. A manager salary can eat into your rent income real fast. Usually want at least 50 spaces in your park to have a manager. 

good luck!

If anyone is looking to invest in a MHP here in AZ feel free to contact me. We only do off-market listings.