Mobile Home Park - Owner Costs and Suprises

[Patrick Hall]

I am currently eyeballing a couple of smaller Mobile Home (not Rv - though i like those as well).   Not having been involved with a park, anybody have some good ins and outs on what to look for?  What issues can creep up?  Where the surprise gotcha's will be?   

Analysis looks good from my end....not as rosy as it does from theirs...Love it when they show  increased profits and 0 increase in costs over time.  

Rents are 350 and seem reasonable for the area.  No units owned by park.  Dont want to go there. 

The management fee listed (i know...do my own diligence), seemed low at 1500.00 annually so i bumped that up to 3k.  

Units connected to Public sewer so no real worries there although i wouldnt mind TV'ing the sewer for condition.  

From the standpoint of low capital expenditures, low turnover on rents, etc, MHP seem like a great place to park some money.

Thanks in advance for any advice. 

Patrick

[Ryan Groene]

Yea there is a lot that could go wrong from the standpoint of a smaller mobile home park.  MHP's are not like apartments where you just turn the management over to a property manager and just kinda manage them and the numbers work. MHP's require a little more management in terms of the property manager, whom normally lives on site for smaller parks and is either retired or has another jobs.

They normally are compensated free lot rent, and $10-15$ an occupied lot

Water/sewer will be your biggest line item.  If its direct billed to tenants then congrats you have found the golden nuggets of parks, otherwise youll have to submeter or do some kind of RUBS system to collect for water/sewer.  

Ask for utiliity bills for last 3 years to see if there is any leaks, looks for sharp increases, etc.

MHP's are a great place to park money for sure as your going to normally get 15-20% return on your cash invested when done correctly.

Smaller parks(25 spaces andbelow) are going to operate a little higher expense ratio than traditional becuase you don't have more to spread out the fixed and variable cost per unit.

reach out if you have questions