Buying an all Park Owned Home Community


Looking at a 19 pad park with all POHs in the midwest. All the homes are flat tops- so late models. There is 2 pads that I could bring in newer homes. City water & Sewer.
I have 2 questions for this group - Thank You in advance. Business plan is to convert to all tenant owned homes.

  1. I know banks don’t like lending on POH parks, if they do what LTV would you think they would. I know a lot depends on area of county and such.
  2. Being that the homes are older, would I have a tougher time selling them to people. My plan was to offer the homes to the current tenants for $1,000 and warranty them for 90 days.

I believe I can get seller financing, as the current owner is tired of tenants - but I know enough about real estate to know that I don’t want that same headaches and to be stuck.
Thanks again in advance for your responses.


Hi PG,

  1. Sorry, don’t know.
  2. Seems like a decent plan. You could test this theory during due diligence by talking with current tenants and seeing who expresses interest in such a plan. That doesn’t tell you if they will actually do it when the time comes of course, but if no one even expresses interest in theory, that would be valuable info.
  3. How do you see the numbers working out on this park? I don’t know what the market rents are, but is the NOI on 19 pads really going to be worth your time and trouble?
    Good luck to you!


There are a few banks that will finance POH. I don’t know who they are but I’m sure they are few and far between. I’ve heard from some that there is. I would only jump on this deal if you are basing the purchase price on the value of the lot rent ONLY. Quite often I have seen owners cap the income of the homes which is not going to work once you sell the homes. The few POH’s that I have run into I have been able to sell to tenants or just tell them to pay me for a year and its yours but the tenant now has all the maintenance. Tenant must have skin in the game, you don’t just give it to them no matter how bad they look.


I would consider the homes to be worth zero value and only assess the park based on lot rent. The rent on the homes will be a wash. Expenses to maintain the homes will likely cost more than you are receiving in rent.
As for selling the homes for 1K you will face a up hill battle. Most can afford the rent but not the upkeep on a home. If they do buy, which is unlikely, they will simply walk away as soon as any maintenance is required. Most likely the homes will fall into disrepair before they walk and you will be left with the cost to demolish the homes.
I would not invest in a park of this age having all POHs. It is on it’s last legs.


I understand the majority opinion on this forum to value parks based solely on the pad rental with a 30% expense draw down. I have a 20 space park with 7 TOHs and 13 POHs. We take very very good care of our rental homes, keep them in sound condition and make our repairs promptly and thoroughly. The gross on the park with the POH rents is exceptional and we only have a 30% expense ratio for the park as a whole with honest numbers. We are fortunate to have our park in a very high demand rental area. Rents are high and labor costs (repairs) are low.

Many on this forum talk of how POHs homes are usually junk with tarps and rotting floors. Well if that is how you take care of your cash flow well shame on them. Frank’s method of valuing parks is sound but when his valuation of my park puts it at $550 K and it nets 100K per year I wish there was a way to appropriately account for this in park valuations. Many, many businesses have tremendous value with little value associated to the bricks and mortar associated with the enterprise. Cash flow should count for something in the valuation.


There are exceptions to every situation, yours appears to be one in this case. However it is always safest to rely on the majority of past experience.
Exceptions to the norm should be discounted.


Yeah… I understand Greg. My challenge is that POHs if managed correctly while being maintained and cared for correctly can provide a significant boost in cash flow and NOI. That additional positive cash flow has value both as a long term stream and in a present value. It is true that many banks have a tough time lending on the value of this cash flow so let that be a tool in negotiating your price but an intrepid park owner can leverage POHs to their advantage. I just wish this forum could accept POHs as a growing part of the industry and not be so averse to their value (if managed correctly).


@Propboy40, I agree that the cash flow from well maintained POH is impressive. I have them myself now and I am very big on maintenance. I think the best way to get the value it is really worth is two LLCs, one for the park property and one for the rental business of the homes. That way there is full value for both entities. Just an idea… I am not selling and haven’t tested that theory.


I believe the primary reason why the industry is down on POHs is because we, in this industry, choose to get into MHCs primarily to simplify our rental investment. Anyone can purchase rental properties, brick and mortar, we choose MHCs so that we do not have to manage leaking toilets, broken windows and tenant damage.
Owning POHs is counter to why we choose to invest in these communities. If I want to manage buildings it would definatly not be mobile homes. MHCs are a depreciating asset, they are poorly constructed increasing maintenance costs and the tenant base is, to be brutally honest, bottom of the barrel.


Interesting… my wife has an accounting/payroll company that does in MHPs including ours. I will ask her about it.
Thanks- Roger


Good points Greg. Prior to buying this last park wife and I looked at apartments, duplexes, tri’s, etc. I could not get anything above a 1 or 2 % annualized ROI and most were break even. Of course it could have been the time we were looking but needless to say we ‘followed the money’. I think we have been lucky in our timing and tenants. Sometimes luck is part of the equation.


As per Greg; he is point on correct–the other major hassle is the potential buyer’s pool is greatly diminished therefore your cap rate will be higher. We find with over 30 years of experience having POH that are very quickly depreciated by both lenders and buyers how is the value of the property really increased? We look at empty sites and fill them with new or nearly new homes so the clientele base is improving and our resale of our parks have great appeal. Most seasoned park owners are not interested in the baby sitting of POH’s and their decreasing value. It might look on paper but the future is very questionable as to the real future value of the park or if the neighborhood is disintegrating who cares.



Thank you Carl for the comments. As I read your comments and those of others I am thoughtful that I may not be very ‘worldly’ with regard to MHPs in other parts of the country. Here in the Pacific NW mobile homes are very expensive. New single wides are well north of 60k and new park models are over 50k. Used park models are in the 40s. Moving homes is heavily regulated and also very expensive. We don’t apply or assume any value to our POHs on paper- they are merely cash flow assets. They are ‘baby chick eggs’ and require care and attention as I am replacing siding on one this week and a new hot water tank on another. We take care of them, they command solid rental numbers (750 to 850 per month) and due to high rental demand we have good renters. I try not to look at people who rent from me as ‘bottom of the barrel’.

My final thought on this pretty simple. I too have spent 40 years in park ownership- both in my dad’s parks, my uncle’s and my own. At the end of the day there are multitudes of park variations. From those 3 space grandma and grandpa ranches to the mega parks that so many senior members of this forum own. Within these parks there are also park owners and potential park owners who have POHs as part of the park portfolio. Ultimately it would be wonderful if every person on this forum owned nothing but TOH parks with great cash flow and low expenses. But that simply is not the case.

It would be nice if this park would leverage it’s knowledge and experiences not only in what could be the simplest park format but also into other formats that may require more hands on work, focus and involvement with potentially greater cash flows and ROIs.


Thanks for the insight.


Thank you for your additional input on this issue.


I think putting park owned homes is a viable way to build cash flow for owners who are willing to do the work. Those owners who are investors that are looking for income without day to day involvement may not want a park with park owned homes. I don’t mind the work and I am involved in construction anyway so the maintenance is just par for the course for me. I am using them as a way to build my bottom line so I can purchase more properties in the future. Each one of us has their own goals and their own way to reach them. I don’t think there is THE perfect way for everyone. I look at this forum as a place to gather ideas, learn some do’s and don’ts from the posts and apply what I think will work for my particular situation.


Thanks to all that responded. Each one had great points to think about.


Seems like a decent plan.