Pitfalls of investing in MHP

[Account Closed]

Hi everyone,

I am new to MHP investing and I'm looking at MHP in Lakeland, FL to start investing in.

I need your help as I am still in the learning phase.

There is a list of my questions:

1. What should I check buying MHP, taking into account that 100% homes are park owned?

I know that all homes are built before 1976. They have been remodeled. Do these homes worth anything?

Is it important to know materials the pipes are made of?

What else should I know?

2. What kind of specialists should be hired? Is experienced MH inspector the only one person who can prevent me from making mistakes? Should I hire anyone else, e.g. RE agent?

3. Is the land shape important?

Thank you for any information.

[Derek Robinson]

1. What should I check buying MHP, taking into account that 100% homes are park owned?

I like to stay away from parks that have private wells and septic tanks.  City water and sewer is they way to go, especially if you are new to MHP investing.  If it's city water, it is ideal that the units are separately metered.  You'd be surprised in how much more water people will use if it's free to them. 

If homes are park owned, I'd want to make sure the current owners have titles.  When I buy a park, my longterm plan is to sell off all park owned homes.  If you don't have titles, this can be a big challenge.  This is another can of worms, but ideally you don't want to own the homes yourself, you just want to own the dirt under them.  Fixing trailers, especially old ones, can get pricey, as they are built cheaply.

A further can of worms, if you go the route of selling off the homes, they have little value (around $1,500 to $2,500) unless you are willing to owner finance them.  You can sell them for $10,000 or more if you are willing to carry the note.  Lonnie Scruggs was the king of this.  Google his name and order his book "Deals on Wheels"

I know that all homes are built before 1976. They have been remodeled. Do these homes worth anything?

See above.  In this income bracket, you'll have a hard time finding anyone to come up with much cash to purchase these homes, but if you are willing to owner finance them, you can sell them for quite a bit.  Lower income tenants care more about they monthly payment and less about purchase price.  I'm not saying to take advantage by any means.  Owner financing trailers gives them the opportunity of home ownership that they wouldn't have otherwise.  Plus, owners will tend to take better care of the park and their home.  Win Win.

Is it important to know materials the pipes are made of?

I've never run into a problem.  If it's an old park and their haven't' been any issues, then I wouldn't worry.

What else should I know?

I think owning a MHP from a distance will be challenging, especially if it's your first and you own all the trailers.

2. What kind of specialists should be hired? Is experienced MH inspector the only one person who can prevent me from making mistakes? Should I hire anyone else, e.g. RE agent?

Depending on the size of the park, you might need an onsite manager. If it's small enough, you can find a property manager that will handle it for you. I wouldn't get a real estate agent if it's not listed on the MLS, it's much easier in most cases to talk with the owner directly. If it is listed, get your own agent to represent you and your interests. You might have a hard time finding an agent with MHP experience though

I own three parks, buying more.  I've talked with a lot of investors in the space and done a ton of research.  I'm happy to help any way I can :-)