Buying first mobile home park

[Mack Braun]

Hello all! My parents have recently started showing interest in buying their first mobile home park. The opinions of those they are connected to seem to vary. Some say this is a great investment and others say that it will be a nightmare that they will regret. I am wondering if any of you have any wisdom to share about mobile home park investing. My parents are hopefully close to retirement and I don’t want them to buy a huge problem. Thanks for the help!

[Frank Rolfe]

I bought my first park in 1996 with the same concerns as your parents and their friends. I bought it for $400,000 and sold it for around $1,500,000 -- but I would never make that same purchase today. The key to happiness with mobile home parks is to buy those that have favorable 1) infrastructure 2) density 3) economics 4) age of homes and 5) location (we call this I-D-E-A-L) -- and the correct sum of those equations yields what resembles a high-density subdivision, and not the "trailer park" that people always think of. 

After that first park, I learned a lot about what works and does not work. We modified our buying criteria over time and today own 20,000 lots of "high-density subdivisions" and NOT trailer parks. Before your parents even think about buying a mobile home park, they need to tour those they can find on a Google search of "mobile home parks in _______". Note how some of these have nice mobile homes, nice residents, pride of ownership, good infrastructure and desirable locations. That's what they want to buy. Not the nasty ones.

That being said, the big money is in identifying the nasty ones that could be brought back to life as nice ones with some capital and desire. These turn-around projects are often the most lucrative niche in real estate.

The bottom line is that your parents need to do a bunch of research and understand what investment grade mobile home parks look like, and then focus only on that subset. None of their friends will understand any of this unless they have also taken the time to do the research and learn what mobile home parks are all about.