Mobile Home Park Investors

[Charles Roby]

If there are any fellow mobile home park investors out there, it would be great to hear any input you might have.  I'm a partial equity investor in 4 parks in Michigan.  I know the lead investor and park manager well.  They are currently looking to raise capital to purchase additional homes for one of the parks.  The occupancy is below the ideal level in this park because there are empty lots, ie the homes don't exist.  There seems to be fairly solid demand to rent the homes out.  This would be structured as debt and would be my first experience with this type of structure.  Any thoughts regarding this scenario are welcome.  Thanks very much!

[Matt P.]

MiltipleMH Park owner here. One of my parks is up near your neck of the woods in WI. 

I would suggest reconsidering the idea of renting the homes out. While purchasing homes to fill vacant spaces is a good plan, you need to sell those homes and not rent them out. Renting homes out is the antithesis to what MH Park investing is all about. We invest in the business because you can't hurt the dirt. It's like owning a diner where the customers are chained to the table. Having rentals makes the property LESS attractive to a potential buyer (buyer as in "investor" for you exit strategy).

Every MH Park operator I know (including myself) discounts any and all rental homes when valuing the property. Lenders will even exclude all rental income from home rentals when valuing the property. 

Speak to your local MH dealer....sometimes you can work a deal where they will put their models on your spaces and sell the in your park. This is the cheapest way to get a home on a space that you can sell to a tenant. 

Good lu