MHP Investors: Do You Like Park-Owned Homes?

Question

I've worked with a mobile home park firm the last few years and in my experience, most park investors don't like park-owned homes because of the high repair costs (even though you can usually rent them out 2-3 times higher than tenant-owned home spaces). Other investors prefer 50%+ POH units and have an array of strategies that justify a high POH/TOH ratio, commonly leasing them on contract to purchase to existing tenants.

I think a large factor has to do with the age and condition of homes. Nobody wants a POS mobile built in 1951 that needs an extra $5k in capital repairs before you can rent it out, but obviously a 2005 DW that's at least B condition isn't something I would necessarily stray away from.

My question is for all the park investors out there: do you prefer a larger number of park-owned homes or tenant-owned homes? Be as general or as specific as you like, it's not a clean cut-and-dry answer for most people I think.

Jack Martin · Answer

Account Closed sales of POHs can create another stream of income, and a strategy we use is to apply that income toward acquiring additional homes to fill vacant lots if there are any.  You can create a rolling capitalization of your POH/vacant lot strategy that way.

The bottom line is the most stable mobile home park involves eliminating POHs.  (if that is what you are after)

With that said, a park on the beach in San Diego with100% POHs would probably be a different story:)

All the best,

Jack

James Rey · Answer

@Michael Ablan.  I agree.  We have several parks and if POH we do lease options with down payments to try to convert all our maintenance just to common areas.  You get the best of both worlds that way.

Michael Ablan · Answer

Account Closed  We bought ours with a majority of the homes being park owned.  We liked this because it allowed us the ability to sell them ourselves, and make a ton of extra $ from the down payments and monthly interest. Yes, there's more work involved, but now we have a bunch properties that rent for as much as some of our SFH but we don't have to do any of the repairs.

Alina Trigub · Answer

Account Closed Preference is given to tenant-owned. It doesn't automatically eliminate the POH. In such case the strategy would be to offer lease to own.

Best!

James Rey · Answer

@Caleb Glenn. I agree. We have several parks and if POH we do lease options with down payments to try to convert all our maintenance just to common areas. You get the best of both worlds that way.

Mike Krieg · Answer

Tenant owned homes for sure. We also invest in funds that hold the parks. Our group isn't too interested in running the parks so the fund works great.

Ed Emmons · Answer

I like POH as long as the homes aren’t old  for all the reasons mentioned above.  I invest for cash flow.  I have a system of rehabbing that works and has been more profitable for me than my multi families.

Neil Schoepp · Answer

TOH

MHP Investors: Do You Like Park-Owned Homes?

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