Investment in Mobile Home Park

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Topic Author
MrNo
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Investment in Mobile Home Park

Post by MrNo »

Hi All!

i have an opportunity to invest in Mobile Home Park. Wondering if anybody had any experience with such investment. What are the pitfalls & what to look for.

There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park. I am supposed to get more details this week

I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?

Thank you!
Mister No
playtothebeat
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Re: Investment in Mobile Home Park

Post by playtothebeat »

If you decide to raise rents and/or evict, it’s easier said than done. Owners band together to protect one another, and there are optics behind trying to evict a mobile park resident.. keep that in mind.
123
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Re: Investment in Mobile Home Park

Post by 123 »

I would be concerned about being it being 1/3 vacant. Are there other mobile home parks nearby and how much of a vacancy factor do they have? It's costly and cumbersome to move a mobile home and, depending on their size, most of them are never moved after their initial placement. So if the park is on a downward spiral with older mobile homes someone is less likely to move a new unit in there.

Were the vacant spots ever occupied? You really have to dislike a park to go through the expense of relocating your mobile home to another place. A mobile home park could get a reputation that is hard to overcome.

If the vacancy factor can't be overcome there is no purpose to add spaces to it.
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F150HD
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Re: Investment in Mobile Home Park

Post by F150HD »

what is drawing you towards investing in this?
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

playtothebeat wrote: Wed Jan 20, 2021 12:07 am If you decide to raise rents and/or evict, it’s easier said than done. Owners band together to protect one another, and there are optics behind trying to evict a mobile park resident.. keep that in mind.
Thats not intent at all. I would like them to stay, happy and not to move = not empty homes
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

123 wrote: Wed Jan 20, 2021 12:27 am I would be concerned about being it being 1/3 vacant. Are there other mobile home parks nearby and how much of a vacancy factor do they have? It's costly and cumbersome to move a mobile home and, depending on their size, most of them are never moved after their initial placement. So if the park is on a downward spiral with older mobile homes someone is less likely to move a new unit in there.

Were the vacant spots ever occupied? You really have to dislike a park to go through the expense of relocating your mobile home to another place. A mobile home park could get a reputation that is hard to overcome.

If the vacancy factor can't be overcome there is no purpose to add spaces to it.
Thank you!
I've been told that these units need some repair work. They are sending someone to inspect them this week and they will provide a report what needs to be done to be fixed and ready to move in. They said that they dont think its a major work.

That was one of my concerns as well.
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

F150HD wrote: Wed Jan 20, 2021 12:32 am what is drawing you towards investing in this?
Additional stream of income. It seems decent opportunity (for now)
59Gibson
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Re: Investment in Mobile Home Park

Post by 59Gibson »

Do you have mobile home rental experience? Landlord experience? I'd read through this post from 2019 and maybe Bigger Pockets

viewtopic.php?t=291160
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galawdawg
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Re: Investment in Mobile Home Park

Post by galawdawg »

Where is the mobile home park located?

What "type" of mobile home park is this? Is it an established mobile home community in Florida with park model mobile homes that primarily draw retirees of modest means or is it the type of mobile home park that is common in rural areas of Georgia at the foot of the Appalachian mountains (run-down decrepit old trailers and campers, high crime rate, transient population)?

Depending on the nature of the community and where it is located, you may have great difficulty leasing those empty lots. Some counties now regulate the age and condition of mobile homes permitted to be moved in or into the jurisdiction. That means if the mobile home park caters to a-low income and/or transient population the expense of bring in new (or newer) mobile homes will not be recovered by the rent your market will bear.
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Re: Investment in Mobile Home Park

Post by Sandtrap »

MrNo wrote: Tue Jan 19, 2021 11:50 pm Hi All!

i have an opportunity to invest in Mobile Home Park. Wondering if anybody had any experience with such investment. What are the pitfalls & what to look for.

There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park. I am supposed to get more details this week

I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?

Thank you!
Mister No
Questions:
1. Are you purchasing this yourself or with another or others?
2. Are you buying this outright as a sole owner with cash or your own financing, or with "seller terms"?
3. Do you already own rental property?
4. Are you an experienced multi unit residential income property owner with 10 or more rental units?
5. How long has this property been on the market?
6. How long has the existing owner owned the property? Why is he selling it? Does he own others?
7. What is the sell/buy history of this property?
8. What is the zoning of the area?
9. What is in the neighborhood/area? (nightclubs, auto shops, warehouses, apartment buildings, homes, shopping center?)
10. What types of rental leases do current tenants have, duration of leases, deposits, terms?
(you will have to assume these leases as a buyer).
11. Have you consulted with legal counsel?
12. Are you purchasing through a realtor, agent, or is this a FSBO?
13. Why are you interested in this property (by the numbers, otherwise reasons).
14. Are you purchasing this with all cash with no loans?
15. Cash reserves, operating expenses reserves?
16. Do you plan to "self manage" or use a property management company?
17. Do you plan to do repairs that you can do yourself, or is this a "hands off" thing?
18. Are you a distance owner or are you in the area and can visit this property easily, daily if needed?

j :D
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JoeRetire
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Re: Investment in Mobile Home Park

Post by JoeRetire »

MrNo wrote: Tue Jan 19, 2021 11:50 pm There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park.
Do you intend to keep the same property manager? Or find a new one?
I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?
Will you be the sole owner?
Do you have experience owning rental properties and dealing with a property manager?

Most of all: do you want a second job like this?
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
mw1739
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Re: Investment in Mobile Home Park

Post by mw1739 »

In addition to the 6 vacant lots, how many of the 13 lots are current and what is their payment history? How are the utilities billed (master or individually)? Are these homes rented or being sold on contract? What are the lease terms (if rented)? How is the property manager screening tenants? What are the rules for tenants and are you comfortable with them?
alfaspider
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Re: Investment in Mobile Home Park

Post by alfaspider »

I think the biggest pitfall is that most of the residents will be of modest mens and are most likely to be in industries impacted by COVID. So, there's a high chance at least some residents are or will become delinquent in the near future.

There are various legal restrictions on eviction right now, depending on your jurisdiction. Besides that, how much stomach do you have for putting a poor family out on the street?
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gr7070
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Re: Investment in Mobile Home Park

Post by gr7070 »

Invest in or buy?

Invest in, hard pass.

Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.

However, if you're ok with mobile homes, the parks can be a viable business. Lots to learn before doing so.
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Re: Investment in Mobile Home Park

Post by Jack FFR1846 »

With Covid, tenants can't be evicted. Is it a case that the current owner can't afford to have a trailer park bringing in zero dollars a month, yet pay property taxes and other expenses? This seems to be a horrible time to become a landlord.
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6bquick
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Re: Investment in Mobile Home Park

Post by 6bquick »

gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
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gr7070
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Re: Investment in Mobile Home Park

Post by gr7070 »

6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Mobile homes are an item that, largely, few to no one should own.

I do not think it's an immoral venture like owning payday lending, but it's just a poor product for most.

I can readily find other things that I'd rather own with my investable monies and spend direct time and effort on.
Last edited by gr7070 on Wed Jan 20, 2021 12:13 pm, edited 1 time in total.
6bquick
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Re: Investment in Mobile Home Park

Post by 6bquick »

gr7070 wrote: Wed Jan 20, 2021 11:39 am
6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Mobile homes are an item that, largely, few to no one should own.

I do not think it's an immoral venture like owning payday lending, but it's just a poor product for most.

I can readily find other things that I'd rather own with my money and spend direct time and effort on.
fair enough. Thanks for the reply!
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Re: Investment in Mobile Home Park

Post by Yooper »

mw1739 wrote: Wed Jan 20, 2021 10:18 am How are the utilities billed (master or individually)?
This is actually quite important. I personally know of a mobile home park that was well established (been there forever). For whatever reason the owners of the park began having trouble paying the water bill(s). Kept telling the city they would, and then not. City threatened to shut off the water. Long story short, people began leaving due to the uncertainty. Last time I drove by it was vacant. Go into this with your eyes wide open and look into everything before moving forward.
Spencer
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Re: Investment in Mobile Home Park

Post by Spencer »

Have owned many parks - great business but it is a business, not a passive investment.

If this is just an investment, skip buying a single park and just invest in $SUI and/or $ELS. Fantastic stocks, great management, low leverage, liquid...
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

59Gibson wrote: Wed Jan 20, 2021 7:46 am Do you have mobile home rental experience? Landlord experience? I'd read through this post from 2019 and maybe Bigger Pockets

viewtopic.php?t=291160
thanks, i've seen that topic before posting mine. OP on that topic had a different intent than me. Thats why i made new posting.

I did find there lots of good points and suggestions
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MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

Sandtrap wrote: Wed Jan 20, 2021 9:59 am
MrNo wrote: Tue Jan 19, 2021 11:50 pm Hi All!

i have an opportunity to invest in Mobile Home Park. Wondering if anybody had any experience with such investment. What are the pitfalls & what to look for.

There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park. I am supposed to get more details this week

I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?

Thank you!
Mister No
Questions:
1. Are you purchasing this yourself or with another or others? - with one partner which is friend of mine.
2. Are you buying this outright as a sole owner with cash or your own financing, or with "seller terms"? - Sole owner
3. Do you already own rental property? - My partner/friend does. I do not
4. Are you an experienced multi unit residential income property owner with 10 or more rental units? - No
5. How long has this property been on the market? - it just came
6. How long has the existing owner owned the property? Why is he selling it? Does he own others? - trying to find out. We heard that he was not willing i to invest more. Thats why those units were empty. Right now its under-performing compared to others in area.
7. What is the sell/buy history of this property? - trying to find out, good question.
8. What is the zoning of the area? - Not sure. Can you please explain why it matters
9. What is in the neighborhood/area? (nightclubs, auto shops, warehouses, apartment buildings, homes, shopping center?) - Yes, City/Town is near by
10. What types of rental leases do current tenants have, duration of leases, deposits, terms? - waiting for that answer
(you will have to assume these leases as a buyer).
11. Have you consulted with legal counsel? - not yet
12. Are you purchasing through a realtor, agent, or is this a FSBO? - Consulting agency that specializes in Mobile Home
13. Why are you interested in this property (by the numbers, otherwise reasons). - because its under-performing and with some investment cold be worth much more. Probably sell it after 5 years
14. Are you purchasing this with all cash with no loans? - Cash
15. Cash reserves, operating expenses reserves? Yes on both
16. Do you plan to "self manage" or use a property management company? Property management company
17. Do you plan to do repairs that you can do yourself, or is this a "hands off" thing? property is 2000 miles away. The consulting company has a team and they provide estimate for each unit.
18. Are you a distance owner or are you in the area and can visit this property easily, daily if needed? 2000 miles away

j :D
this i a good & long list. I'll try to answer it best i can, at the moment

1. Are you purchasing this yourself or with another or others? - with one partner which is friend of mine.
2. Are you buying this outright as a sole owner with cash or your own financing, or with "seller terms"? - Sole owner
3. Do you already own rental property? - My partner/friend does. I do not
4. Are you an experienced multi unit residential income property owner with 10 or more rental units? - No
5. How long has this property been on the market? - it just came
6. How long has the existing owner owned the property? Why is he selling it? Does he own others? - trying to find out. We heard that he was not willing i to invest more. Thats why those units were empty. Right now its under-performing compared to others in area.
7. What is the sell/buy history of this property? - trying to find out, good question.
8. What is the zoning of the area? - Not sure. Can you please explain why it matters
9. What is in the neighborhood/area? (nightclubs, auto shops, warehouses, apartment buildings, homes, shopping center?) - Yes, City/Town is near by
10. What types of rental leases do current tenants have, duration of leases, deposits, terms? - waiting for that answer
(you will have to assume these leases as a buyer).
11. Have you consulted with legal counsel? - not yet
12. Are you purchasing through a realtor, agent, or is this a FSBO? - Consulting agency that specializes in Mobile Home
13. Why are you interested in this property (by the numbers, otherwise reasons). - because its under-performing and with some investment cold be worth much more. Probably sell it after 5 years
14. Are you purchasing this with all cash with no loans? - Cash
15. Cash reserves, operating expenses reserves? Yes on both
16. Do you plan to "self manage" or use a property management company? Property management company
17. Do you plan to do repairs that you can do yourself, or is this a "hands off" thing? property is 2000 miles away. The consulting company has a team and they provide estimate for each unit.
18. Are you a distance owner or are you in the area and can visit this property easily, daily if needed? 2000 miles away
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

Yooper wrote: Wed Jan 20, 2021 12:11 pm
mw1739 wrote: Wed Jan 20, 2021 10:18 am How are the utilities billed (master or individually)?
This is actually quite important. I personally know of a mobile home park that was well established (been there forever). For whatever reason the owners of the park began having trouble paying the water bill(s). Kept telling the city they would, and then not. City threatened to shut off the water. Long story short, people began leaving due to the uncertainty. Last time I drove by it was vacant. Go into this with your eyes wide open and look into everything before moving forward.
Good point, thank you
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

gr7070 wrote: Wed Jan 20, 2021 10:45 am Invest in or buy?

Invest in, hard pass.

Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.

However, if you're ok with mobile homes, the parks can be a viable business. Lots to learn before doing so.
thats a fair point. Would i desire to live in mobile home, not for me. But never say never :) I'm planning to buy it
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

mw1739 wrote: Wed Jan 20, 2021 10:18 am In addition to the 6 vacant lots, how many of the 13 lots are current and what is their payment history? How are the utilities billed (master or individually)? Are these homes rented or being sold on contract? What are the lease terms (if rented)? How is the property manager screening tenants? What are the rules for tenants and are you comfortable with them?
I am hoping to get his information later this week, along the "rent" history for past 3 years
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

JoeRetire wrote: Wed Jan 20, 2021 10:06 am
MrNo wrote: Tue Jan 19, 2021 11:50 pm There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park.
Do you intend to keep the same property manager? Or find a new one?
I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?
Will you be the sole owner?
Do you have experience owning rental properties and dealing with a property manager?

Most of all: do you want a second job like this?
It seems current property manager lived there for a while. if thats the case we would keep that.

I would not be a sole owner, its a partnership with a friend 50/50
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hand
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Re: Investment in Mobile Home Park

Post by hand »

MrNo wrote: Wed Jan 20, 2021 12:58 am
Thank you!
I've been told that these units need some repair work. They are sending someone to inspect them this week and they will provide a report what needs to be done to be fixed and ready to move in. They said that they dont think its a major work.

That was one of my concerns as well.
This seems like a significant conflict of interest - YOU should be sending someone to inspect.

Also, you'll want to understand local ordinances related to trailer parks and capacity, not to mention understand current cash flows, and capacity / likelihood of existing tenants to pay rent given COVID.
alfaspider
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Re: Investment in Mobile Home Park

Post by alfaspider »

6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Different poster, but my take is that the basic idea of mobile homes is a good one. The practice is the problem.

In the days of mass production and heavy automation, raw materials and products are cheap. Labor is expensive. If you manufacture a home rather than build each one at the site, you drastically reduce costs for housing, and can theoretically provide higher quality housing at a lower price. Additionally, manufactured houses can be erected at a site very quickly. This could be a convenient option if you own some land and want to be able to live on it ASAP rather than wait months for a stick built dwelling.

In practice, mobile homes abuse buyers on two fronts: 1) the purchase of the dwelling itself tends to be financed with high interests loans with onerous terms, 2) most mobile home owners don't own their land, so they are still paying rent. This leaves the mobile home owners with the worst of both worlds: the burdens of home ownership (home maintenance, mortgage interest), but without the benefits (home appreciation, protection from housing cost increases). Not only that, but if you fail to pay site rent or it increases beyond your means, you also likely lose your investment in the dwelling itself. They are expensive to move and are often not structurally sound to move after a certain amount of time, meaning that the owners cannot shop for a location with cheaper site rent. A lot of mobile home landlords really take advantage of the difficulty and cost of moving, and will bleed site tenants dry after offering a deceptively low introductory price.

Given the above practices, they really only make sense if you own the land and can purchase the home itself outright. Even then, there are concerns about durability and storm protection.

Of course nothing prevents a mobile home park owner from behaving ethically, but an ethical owner may end up with relatively disappointing returns.
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David Jay
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Re: Investment in Mobile Home Park

Post by David Jay »

MrNo wrote: Wed Jan 20, 2021 2:49 pmproperty is 2000 miles away.
A 1/3 empty mobile home park 2000 miles away?

NO. Hard stop.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
billlyb
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Re: Investment in Mobile Home Park

Post by billlyb »

sounds like a lot of city/county upgrades might be needed
empty los, outdated septic ???
an as suggested send an inspection team that you hire
good luck, theres lots of them here in fl,
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gwe67
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Re: Investment in Mobile Home Park

Post by gwe67 »

David Jay wrote: Wed Jan 20, 2021 3:10 pm
MrNo wrote: Wed Jan 20, 2021 2:49 pmproperty is 2000 miles away.
A 1/3 empty mobile home park 2000 miles away?

NO. Hard stop.
Too many red flags to count. Also, partnership is a horrible idea. On top of that, you have three young kids and a stay-at-home wife. No way you have time to manage this "side business".

Put this out of your mind for six months, then re-evaluate. Trust me, it will still be for sale then.

That being said, 99% chance that you go ahead and do this.....
Last edited by gwe67 on Wed Jan 20, 2021 3:24 pm, edited 1 time in total.
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aristotelian
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Re: Investment in Mobile Home Park

Post by aristotelian »

Have you run numbers to figure out expected revenue vs startup and maintenance costs? Do you have a business model with expected breakeven point and ROI?
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JoeRetire
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Re: Investment in Mobile Home Park

Post by JoeRetire »

MrNo wrote: Wed Jan 20, 2021 2:55 pm
JoeRetire wrote: Wed Jan 20, 2021 10:06 am
MrNo wrote: Tue Jan 19, 2021 11:50 pm There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park.
Do you intend to keep the same property manager? Or find a new one?
I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?
Will you be the sole owner?
Do you have experience owning rental properties and dealing with a property manager?

Most of all: do you want a second job like this?
It seems current property manager lived there for a while. if thats the case we would keep that.

I would not be a sole owner, its a partnership with a friend 50/50
It's not a job I would ever consider buying. But good luck with whatever you decide to do.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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David Jay
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Re: Investment in Mobile Home Park

Post by David Jay »

MrNo wrote: Wed Jan 20, 2021 2:55 pmIt seems current property manager lived there for a while. if thats the case we would keep that.
Another red flag.

Think this through: The current property manager has been there for a while. That means that they have overseen the decline of the park and the departure of 1/3 of the residents. And you want to keep them on?
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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Taylor Larimore
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Buying a business.

Post by Taylor Larimore »

MrNo:

When a business is going under, one of the first things an owner will do is try to sell their business. Buying a business is very risky. The owner knows much more than the buyer.

When I was a SBA loan officer making loans to purchase small businesses, one of the questions I would ask is: "Please show me a copy your last two business tax returns" (they are likely to show the worst performance.) If the returns are profitable, especially with a positive trend, it is a good sign -- otherwise watch-out. It the owner tells you the business "real" return is better than shown on the tax returns, you are dealing with a liar.

Personally, I think that being a part owner of a half-empty mobile home park 2000 miles away is likely to be a costly mistake.

Good luck with whatever you decide.

Best wishes.
Taylor
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Re: Investment in Mobile Home Park

Post by Sandtrap »

OP:
As an alternative, Would you consider purchasing a multi unit residential income property, by yourself, as a sole owner and owner managed, in the area where you live at an excellent price and excellent positive cash flow?

j :D
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gr7070
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Re: Investment in Mobile Home Park

Post by gr7070 »

alfaspider wrote: Wed Jan 20, 2021 3:02 pm
6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Different poster, but my take is that the basic idea of mobile homes is a good one. The practice is the problem.

In the days of mass production and heavy automation, raw materials and products are cheap. Labor is expensive. If you manufacture a home rather than build each one at the site, you drastically reduce costs for housing, and can theoretically provide higher quality housing at a lower price. Additionally, manufactured houses can be erected at a site very quickly. This could be a convenient option if you own some land and want to be able to live on it ASAP rather than wait months for a stick built dwelling.
There is a distinction between mobile homes and manufactured/modular homes.
alfaspider
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Re: Investment in Mobile Home Park

Post by alfaspider »

gr7070 wrote: Wed Jan 20, 2021 5:44 pm
alfaspider wrote: Wed Jan 20, 2021 3:02 pm
6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Different poster, but my take is that the basic idea of mobile homes is a good one. The practice is the problem.

In the days of mass production and heavy automation, raw materials and products are cheap. Labor is expensive. If you manufacture a home rather than build each one at the site, you drastically reduce costs for housing, and can theoretically provide higher quality housing at a lower price. Additionally, manufactured houses can be erected at a site very quickly. This could be a convenient option if you own some land and want to be able to live on it ASAP rather than wait months for a stick built dwelling.
There is a distinction between mobile homes and manufactured/modular homes.
True. I was just stating the general principle that moving more of home construction into a factory has a purpose. Mobile homes tend to be fully complete, while the modular ones still require on-site assembly. It's just a different level of off-site prep. I assume the OP is talking mobile variety .
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

David Jay wrote: Wed Jan 20, 2021 4:42 pm
MrNo wrote: Wed Jan 20, 2021 2:55 pmIt seems current property manager lived there for a while. if thats the case we would keep that.
Another red flag.

Think this through: The current property manager has been there for a while. That means that they have overseen the decline of the park and the departure of 1/3 of the residents. And you want to keep them on?
that is a good and valid point. What we've been told is that current owner did not want to fix those units.
Topic Author
MrNo
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Re: Buying a business.

Post by MrNo »

Taylor Larimore wrote: Wed Jan 20, 2021 4:45 pm MrNo:

When a business is going under, one of the first things an owner will do is try to sell their business. Buying a business is very risky. The owner knows much more than the buyer.

When I was a SBA loan officer making loans to purchase small businesses, one of the questions I would ask is: "Please show me a copy your last two business tax returns" (they are likely to show the worst performance.) If the returns are profitable, especially with a positive trend, it is a good sign -- otherwise watch-out. It the owner tells you the business "real" return is better than shown on the tax returns, you are dealing with a liar.

Personally, I think that being a part owner of a half-empty mobile home park 2000 miles away is likely to be a costly mistake.

Good luck with whatever you decide.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "If you’re going to be an entrepreneur, have a stomach for risk. Being an entrepreneur is not for the faint of heart. It is a high-risk, high-reward proposition."
Thank you Mr. Larimore. I already feel honored and humbled that you provided your input. I've put a request yesterday to see cash flow and tax returns for last 3 years. If those units have been consistently rented out or not. I think that will be good indicator if current owner neglected this investment or there is other reason why this park is under-performing

Everybody provided lots of good feedback that i greatly appreciate. One positive is that it seems that park had a positive cash flow but devil is in the details.
Last edited by MrNo on Wed Jan 20, 2021 6:42 pm, edited 1 time in total.
rebellovw
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Re: Investment in Mobile Home Park

Post by rebellovw »

gr7070 wrote: Wed Jan 20, 2021 11:39 am
6bquick wrote: Wed Jan 20, 2021 11:13 am
gr7070 wrote: Wed Jan 20, 2021 10:45 am Personally, I'm not buying into the mobile homes business; it's a product in general I disagree with.
More specifically, what about mobile homes do you disagree with? I don't know enough to have an opinion one way or another, just curious.
Mobile homes are an item that, largely, few to no one should own.

I do not think it's an immoral venture like owning payday lending, but it's just a poor product for most.

I can readily find other things that I'd rather own with my investable monies and spend direct time and effort on.
I agree with this - Buffett has some shameful money in this industry - selling poorly built homes that after a while simply cannot be moved as they rot and fall apart. Taking advantage of the dream to own a home.
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

Sandtrap wrote: Wed Jan 20, 2021 5:04 pm OP:
As an alternative, Would you consider purchasing a multi unit residential income property, by yourself, as a sole owner and owner managed, in the area where you live at an excellent price and excellent positive cash flow?

j :D
why i have a strange feeling about this question :). i would say yes ..
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Watty
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Re: Investment in Mobile Home Park

Post by Watty »

MrNo wrote: Tue Jan 19, 2021 11:50 pm Anything else i should think of ?
I am not sure what the status is right now but there has been a moratorium on evictions and I suspect that it may be extended, but we cannot talk about proposed legislation.

I would be real cautious about buying any sort of rental property right now because of that.
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Raymond
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Re: Investment in Mobile Home Park

Post by Raymond »

David Jay wrote: Wed Jan 20, 2021 3:10 pm
MrNo wrote: Wed Jan 20, 2021 2:49 pmproperty is 2000 miles away.
A 1/3 empty mobile home park 2000 miles away?

NO. Hard stop.
How did the OP even hear of this "opportunity" two thousand miles away? Is the owner related to OP's prospective business partner?
"Ritter, Tod und Teufel"
MikeZ
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Re: Investment in Mobile Home Park

Post by MikeZ »

So I've looked into buying one in the past and have done a fair bit of homework. There are excellent podcasts and things on the subject.

Overall, you should think of this as two separate investments: The park and the mobile homes on the pads.

First, the park:

This is the 'passive' part of the investment. In essence you are buying a small city. You have roads, utilities, enforcement of rules, etc. In exchange for lot rent. Some high level questions. Where is the park located? It is around a larger metro where people are getting priced out of homes? Is it near a bus stop and/or employment centers for residences? Is the area's population gowning or shrinking?

Now here is the thing that I've learned matters the most! Utilities.

Best case, it's city water and city sewer.

It each unit submetered so the tenant is paying for usage? If not, this is usually the first thing someone does to improve profits. You likely own the water lines to each unit, so you'll want to look for leaks as this again is easy money.

If it has a well, or especially a septic, beware. Septic problems for mobile home parks can be a six figure headache and involve the government. Wells need to be tested. There is real risk around this stuff and this single thing can destroy the investment. Some parks were built with orangeburg pipe, which needs to be replaced.

How are the roads? Do they need to be repaved?

Second, the mobile homes:

In general, the investors I read about in the space generally like to just sell them off at a small loss to the current tenants on owner financing to get away from maintenance and give them some pride of ownership. If you are buying an underperforming park, it's a lot like turning around a business. You need to get rid of a lot of bad performers and get the right people in. It's as active as it gets management wise.

I would make sure you get proof of rent rolls and I mean look for cancelled checks and bank statements.

Lastly, what is the exit strategy?

As mobile home parks are valuated on a CAP rate basis, turning around a park can really increase the value fast. You should think of what you want to do with the park long term.

There is a guy on YouTube, 'Investment Joy' that invested in a mobile home park. It's worth a watch to see what you're getting into.

In general, the number of mobile home parks is in decline as the land is redeveloped for other things and cities are not permitting any new ones. As they are valued based on capitalization, there is serious money to be made in turning a run down park around. That said, are you willing to get your hands dirty and have plenty of cash to ride out what inevitable work that needs to be done?
DavidHutton
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Re: Investment in Mobile Home Park

Post by DavidHutton »

How many time have the cops been called and for what? I would also watch the ‘investment joy’ YouTube channel where he talks about the trailers and the park he purchased.
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Nestegg_User
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Re: Investment in Mobile Home Park

Post by Nestegg_User »

MikeZ wrote: Wed Jan 20, 2021 7:47 pm So I've looked into buying one in the past and have done a fair bit of homework. There are excellent podcasts and things on the subject.

Overall, you should think of this as two separate investments: The park and the mobile homes on the pads.

First, the park:

This is the 'passive' part of the investment. In essence you are buying a small city. You have roads, utilities, enforcement of rules, etc. In exchange for lot rent. Some high level questions. Where is the park located? It is around a larger metro where people are getting priced out of homes? Is it near a bus stop and/or employment centers for residences? Is the area's population gowning or shrinking?

Now here is the thing that I've learned matters the most! Utilities.

Best case, it's city water and city sewer.

It each unit submetered so the tenant is paying for usage? If not, this is usually the first thing someone does to improve profits. You likely own the water lines to each unit, so you'll want to look for leaks as this again is easy money.

If it has a well, or especially a septic, beware. Septic problems for mobile home parks can be a six figure headache and involve the government. Wells need to be tested. There is real risk around this stuff and this single thing can destroy the investment. Some parks were built with orangeburg pipe, which needs to be replaced.

How are the roads? Do they need to be repaved?

Second, the mobile homes:

In general, the investors I read about in the space generally like to just sell them off at a small loss to the current tenants on owner financing to get away from maintenance and give them some pride of ownership. If you are buying an underperforming park, it's a lot like turning around a business. You need to get rid of a lot of bad performers and get the right people in. It's as active as it gets management wise.

I would make sure you get proof of rent rolls and I mean look for cancelled checks and bank statements.

Lastly, what is the exit strategy?

As mobile home parks are valuated on a CAP rate basis, turning around a park can really increase the value fast. You should think of what you want to do with the park long term.

There is a guy on YouTube, 'Investment Joy' that invested in a mobile home park. It's worth a watch to see what you're getting into.

In general, the number of mobile home parks is in decline as the land is redeveloped for other things and cities are not permitting any new ones. As they are valued based on capitalization, there is serious money to be made in turning a run down park around. That said, are you willing to get your hands dirty and have plenty of cash to ride out what inevitable work that needs to be done?
From 2000 miles away?? That's where the OP will be {moderator wouldn't accept phrasing !} since it's highly labor intensive with no way for the OP to truly gauge the amount of work put in or quality (note that he said no prior experience in rentals)

Remember some years ago there was a program [possibly NPR] that showed real estate syndicates purchasing of trailer parks, trying to say that they were like gold mines.** They'd buy one, do some minor work, and constantly increase rents to drive up cap rates.... then sell them (to the suckers who thought that they could continue the same). As mentioned above, septic and well were often major problems and would require improvements to CURRENT codes and often needed expensive tests/permits (if one could even get them... some areas have restricted land use that would prevent such high density).

I suspect, like others, that since the syndicates can't evict they are trying to sell the parks to avoid dead money.
(I suspect that they are offering good commissions to commercial real estate agents to offload their properties, which is why they're beating every bush to find buyers.)

** http://olddawgsreinetwork.com/485-syndi ... ome-parks/

see also Frank Rolfe and his {edit"trailer park university" Mobile Home University }




[ I've actually lived in trailers in my early years, as father was a "lifer" senior NCO and we relocated often. Newer trailers, I don't think, are built as structurally sound as they used to be (as it's not as expected to be moved as often as old ones were) but are more esthetic and larger (double and triple wide are more common). Oil heat was commonly used in earlier trailers (which might not even be allowed in some areas anymore), and air conditioning wasn't as common then (remember swamp coolers, anyone?)... still don't see heat pumps for trailers, just normal A/C's so there's sensitivity to electrical rates by residents. BTW, I've looked at satellite views on G@@gle maps for old parks that the family had lived at...all but one is now gone... brownfielded... nothing but dirt and a faint pattern of old road.]
Last edited by Nestegg_User on Thu Jan 21, 2021 7:34 am, edited 3 times in total.
reastman
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Re: Investment in Mobile Home Park

Post by reastman »

@MrNo

I own a mobile home park development project. I added it to my real estate portofolio a little over 3 years ago now.

We tore all the old homes out, started from scratch and are working to develop the community we envisioned when we purchased it.

Its a great way to help with affordable housing in the country, and a great value add to a real estate investing portfolio.

Those I learnt from and most other people who own mobile home parks learnt from, own over 200 mobile home parks in the country.

Please find Frank & Dave who run Mobile Home University.

Hope this helps,
forgeblast
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Re: Investment in Mobile Home Park

Post by forgeblast »

MrNo wrote: Tue Jan 19, 2021 11:50 pm Hi All!

i have an opportunity to invest in Mobile Home Park. Wondering if anybody had any experience with such investment. What are the pitfalls & what to look for.

There are few homes that need some attention. Current owner did not invest much into. It seems there is a space to add additional mobile homes. Park has 20 spaces & 13 are rented out. 6 are vacant and it seems they need some attention and repair in order to be rented out. it has a property manager who lives for free in one of the units & looks after the park. I am supposed to get more details this week

I'm planning to do an inspection of the property, sewer & water. Also to make sure title is clean. Anything else i should think of ?

Thank you!
Mister No
Around us there was a mobile home park that had some issues. 1. was water, they all paid the owner for water bill but he did not pay, which caused the water to be turned off. I would find out what utilities are opened and paid for by the tenants. Around us the trailer parks/mobile homes are almost one step from being homeless. Most are run down, very little repairs done, and in rough shape.
Topic Author
MrNo
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Re: Investment in Mobile Home Park

Post by MrNo »

MikeZ wrote: Wed Jan 20, 2021 7:47 pm So I've looked into buying one in the past and have done a fair bit of homework. There are excellent podcasts and things on the subject.

Overall, you should think of this as two separate investments: The park and the mobile homes on the pads.

First, the park:

This is the 'passive' part of the investment. In essence you are buying a small city. You have roads, utilities, enforcement of rules, etc. In exchange for lot rent. Some high level questions. Where is the park located? It is around a larger metro where people are getting priced out of homes? Is it near a bus stop and/or employment centers for residences? Is the area's population gowning or shrinking?

Now here is the thing that I've learned matters the most! Utilities.

Best case, it's city water and city sewer.

It each unit submetered so the tenant is paying for usage? If not, this is usually the first thing someone does to improve profits. You likely own the water lines to each unit, so you'll want to look for leaks as this again is easy money.

If it has a well, or especially a septic, beware. Septic problems for mobile home parks can be a six figure headache and involve the government. Wells need to be tested. There is real risk around this stuff and this single thing can destroy the investment. Some parks were built with orangeburg pipe, which needs to be replaced.

How are the roads? Do they need to be repaved?

Second, the mobile homes:

In general, the investors I read about in the space generally like to just sell them off at a small loss to the current tenants on owner financing to get away from maintenance and give them some pride of ownership. If you are buying an underperforming park, it's a lot like turning around a business. You need to get rid of a lot of bad performers and get the right people in. It's as active as it gets management wise.

I would make sure you get proof of rent rolls and I mean look for cancelled checks and bank statements.

Lastly, what is the exit strategy?

As mobile home parks are valuated on a CAP rate basis, turning around a park can really increase the value fast. You should think of what you want to do with the park long term.

There is a guy on YouTube, 'Investment Joy' that invested in a mobile home park. It's worth a watch to see what you're getting into.

In general, the number of mobile home parks is in decline as the land is redeveloped for other things and cities are not permitting any new ones. As they are valued based on capitalization, there is serious money to be made in turning a run down park around. That said, are you willing to get your hands dirty and have plenty of cash to ride out what inevitable work that needs to be done?
Thank you so much for this post, its super helpful.
Its been disclosed to us that roads needs some help and it was part of original list that needed to be address, including 6 homes that needs some help. They said that first 2 homes would be fixed within first week, 3 in second week and rest within a month.
We are waiting to hear details regarding utilities

Our long term strategy would be to sell it after 5 or so years, after park has been turned around. Short term would be to fix those units and make them movable. After a year our phase 2 would be to start filling those empty slots with mobile homes, hopefully get it to full capacity
Last edited by MrNo on Thu Jan 21, 2021 10:30 am, edited 1 time in total.
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