Mobile Home Parks And Investing In Them!

[Steve Sett]

Hello All!

I wanted to inquire about Mobile Home Parks and the idea of owning/renting them. I've been looking for a different flavor of real estate to add to my portfolio and I've read/listened to a few people talk about their mobile home rentals and how they are happy with them. I think they have these on more of a land lease type deal from how I understood the discussion. Has anyone ever invested in this or currently own them and what can you tell me about the process of acquiring them, managing them, pros/cons, RoR or CAP on them, types of parks, etc. If there is a blog someplace that gives insight on these topics please list them and I'll take a look!

Thank you all for the assist!

[Jack Martin]

@Steve Sett Investing in mobile home parks will require specialized knowledge and experience that is unique to the MHP asset class, so you’ll need to become adept at the following:

Finding deals - You will need to be adept at sourcing your own deals. Most deals never even hit the market publicly.

Determining what parks to pursue - Every park is not a good candidate for investment. This determination has as much to do with understanding what parks “not to buy” as it does “parks to buy”.

Successful negotiation - assuming you are good at the prior skills, you will still need to understand valuation of parks, so the end result is an acquisition of a park at a fair price.

Due diligence - Understanding what items to investigate and how to navigate the process to eliminate surprises. Again, parks are a unique asset class, so due diligence will include items that are not present in other asset classes. 

Financing – If debt is appropriate, understanding where to source the best debt, how to correctly position the loan package, and qualifying for the loan.

Hiring onsite staff - How to market for, interview, and hire the right onsite team to help you run the park. Maintenance requires specialized knowledge, and a successful management strategy is not a simple as knocking on doors until an existing resident says “I will be your manager”.

Capital improvements - Determining what capital improvements will have the most impact on the park, and properly budgeting for them.

Contractors - The use of contractors can make or break the investment. Understanding the right kind of contractors to hire is critical. Existing relationships with experienced mobile home contractors can eliminate risk and help avoid potential nightmares.

Asset management – Determining the best strategy for the park and putting a plan in place to execute the strategy. Then making the right ongoing decisions to improve the park, the financial performance, and the resident experience. 

The business of parks - Mobile home sales and licensing requirements, business licensing requirements, bookkeeping, accounting, taxes, etc.

IMHO, mobile home parks can be the most stable real estate to invest in, but make sure to have your eyes open as you consider an investment, as they require a unique set of skills to be successful. 

All the best,

Jack