Filling vacant lots in a mobile home park

[Mike Gruttadaro]

We currently own 3 mobile home parks. Our strategy for filling vacant lots has been to buy used homes with a certain criteria, move them in and do rent to own on the homes. It has been a huge success, the demand for affordable housing is great in our area. My concern is having too many "park owned homes". I'm wondering how other park owners are filling their vacant lots. 

[Mike Gruttadaro]

Hey @Jeronimo C.

 Thanks for your response and interest. We have had great success in both purchasing and leasing. The demand is great in our area. My concern is having too many park owned homes that we have to maintain. We do have terms in our rent to own leasing that passes any maintenance on to the current tenant, however if they decide to move out we are responsible for repairs and cleanup before we can lease the home again. We don't want our parks to turn into something like an apartment complex, from a maintenance side of things.

Thanks for the info on 21st Mortgage. I will be looking into that this evening.

To fill our vacant lots, we purchase used 3 bedroom homes and hire a mover to deliver and set up the home. Once the home has a C of O, we rent to own them at $725.00 per month ($340 goes to lot rent and the remaining $380 is their home payment). The cost to update the utilities on the lot, moving and set up and the cost of the home usually runs us about $30,000. I calculate the return on each lot as 

$725 x 12 = $8,700 gross rent per year

$8700 ÷ $30,000 = 29% return 

When we started this strategy about 5 years ago we had about 25 vacant lots. We currently have 9 vacant lots and our goal is 3 per year starting this year. Once we have filled the last 9 lots we plan to expand one of our parks. There is an approved site plan for an additional 50 lots. This is where my concern comes in, as I don't want to have, at some point, potentially another 50 rent to own homes. I've considered contacting manufactured home dealers, however a new home costs too much to be affordable for our market. It would be ideal to have a dealer set up 10-20 homes and sell them directly the tenants and finance them, taking us out of the picture, I just don't know if that is feasible

Let me know what you think or if I can clarify anything.

Thanks again