Your experience with mobile home investing

[Linda Liberatore]

I have some new investors looking at options and I recently read this article in Crain's about Sam Zell and his experience and vision of the future of Mobile Homes and thought I would look to the BP community to get your feedback, thoughts and experiences. Pitfalls Problems to be aware of?  http://www.chicagobusiness.com/article/20160213/ISSUE01/302139989/this-is-chicagos-best-performing-reit?utm_source=ISSUE01&utm_medium=rss&utm_campaign=chicagobusiness

[Jeffrey H.]

The article is correct about this be a recession resilient asset class.  In a recession a mobile home park is already the cheapest place you can live so there is little turnover as a result of economic shifts.  The common theme is that these park owners do not own the homes or want to be in the mobile home repair business.  Tenants own their home and lease the land for perpetual income.

My opinion is the #1 pitfall with mobile home parks is finding one for a fair price.  There are tons of parks listed all the time, but they typically have issues or the Seller is asking an unreasonable price.  Parks with lots of "Park Owned Homes" tend to ask for much more money when investors do not want to own the mobile homes, and will not pay a 200% premium for them.  There is also a bit of secret sauce to acquiring the park for a fair price based on how it performs, and also estimating how you can improve on that.  Due diligence is paramount to make sure you know what you're getting.

Also the performance of an individual mobile home park is hugely dependent on the person running it and how they manage it - are you running a trailer park or a mobile home court?  Are you okay with appliances being on the person's porch and cars on blocks in the yard or do you have rules that no aggressive dog breeds more than 30 pounds are allowed.  Rigor is needed in this business to have a well run and solid tenant base.

The pitfalls of parks beyond acquisition, paying a fair price and management practices are about infrastructure, utilities, and local demand.  A park in the country on well, septic, packing plant, or lagoon has many different risks than something on city water and sewer.  Also making sure that the park is in an economically viable area with consistent jobs and demand for affordable housing is key.  There are people successful who buy these parks in very large towns and also ultra small towns - and you can be successful in either.

Without more information from you that's the skinny on parks.