New to MHP investing

[Jennifer Cooke]

Happy Saturday! 

I have been doing some research into owning a mobile home park and all the research points to it being a great investment. With that being said I am curious what is the catch/downside? Also where do you suggest to start when looking for listing for MHPs? Any advice on this subject would be great since I am new to investing in real estate in general. 

[Frank Rolfe]

The big catch with mobile home parks is that it is nothing like the other real estate sectors and people assume they know what they're doing and they get wiped out because of their arrogance. Here are a dozen things that can destroy you with a mobile home park:

1) Paying too much

2) Bad market (small metro population and low home prices)

3) Bad location in that market (undesirable part of town that nobody wants to live in)

4) Bad infrastructure (failing roads, utility lines, etc.)

5) Private water and/or sewer

6) Master metered electric and/or gas

7) Density too high so you can't fit new homes on the lots

8) Mostly 1960s and 1970s homes on the lots, as they will end up getting scrapped as people move out over time

9) Low lot rents that make the whole business model not worth the effort (like $99 rents in Mississippi)

10) Inability to get or retain traditional financing

11) Environmentally contaminated

12) City or state permit problems

The bottom line is that -- if you are going to seriously buy a mobile home park -- you need to educate yourself on this niche.

As far as finding mobile home park deals, there are basically four methods used:

1) On-line (Mobilehomeparkstore or Loopnet)

2) Brokers (over 50% of the 200+ parks we own came from brokers)

3) Direct mail to park owners

4) Cold-calling park owners