Considering Filling My Park with Park Owned Homes: Your Opinions? My Math?


Here is the situation. I own a 68 lot MHP in Minnesota with around 24 vacant lots. As the years go by if I do not do anything this number will go up from people running away from their 1970’s era tear downs.

So far I have brought in 3 brand new homes. The first one is on a rent credit and will be sold very soon through the cash program to current tenant. The other two I have had since December and have had no luck with nor a ton of interest even though tax return season has come and gone.

In my market it seems the sweet spot is for used homes between $20,000 - $25,000. I have brought in 2 of these used homes so far and sold them and sold another one that came with the park purchase. Problem is they are very hard to find right now and for a low enough price where after I move and re set I can break even around $20,000 - $25,000.

So going the used home route will seemingly take forever to fill my empty lots. That leaves new homes which I can get no problem. I have been considering a plan to purchase new homes through the Cash Program’s Community Owned program or other lender groups of 5 homes at a time to rent out.

For example here is the math for 10 new homes to make it easy:

10 Homes @ $38,000 each from factory = $380,000
Setting 10 Homes @ $10,000 each = $100,000
Total Expense = $480,000
Say $100,000 down payment and $380,000 loan

Homes would rent for $800.00 - $325 lot rent = $475.00 home rent

10 lots rented @ $325 = $39,000 per year - 1 Month Vacancy = $35,750
10 homes rented @ $475 = $57,000 per year - 1 Month Vacancy = $52,250
Total = $88,000 / year with vacancy

I figure the home rental income would cover mortgage payments on the homes and the lot income would go straight to my bottom line. I do not foresee any additional expenses from those 10 extra homes paying lot rent to my park entity.

That means an extra $35,750 to my park LLC’s net income x 10 Cap Valuation = $357,500 added to value of park. Plus the extra $35k each year in income.

Fast forward 10 years and homes are paid off and worth around $25,000 - $30,000 each which I can then sell or keep. 10 homes x $25,000 = $250,000 cash or inventory

So after 10 years I spent $100,000 to make:
$35,750 x 10 years = $357,500 in net income
$357,500 in added park value
$250,000 in cash from sales or home inventory

Total = $965,000 - $100,000 = $865,000

Considerations I have left out:
Mortgage Interest Expense (I look at it as the tenants are paying that for me)
Repairs and Maintenance (I do not see this being too large of a problem with new homes and decent security deposits)
New homes improve the CAP rate at which the park will sell and communities appearance

What am I missing? Any reason I should take another route? I know park owned homes are not a pleasure to own but in my market new home sales are just not happening so far. I can do nothing or?

Thank you,



Did you by chance read through this topic:

Doesnt answer your question but thought it might be relevant


Good read, thank you I had not seen that.


A few additional items to consider:
-Homeowners have far lower turnover than renters. Thus, a park full of homeowners requires less time and expense employing an on site manager and consuming time from the off site manager. A park with homeowners should also have a lower vacancy loss from less turnover. If a severe recession were to ever hit, homeowners should theoretically be a lot more ‘sticky’ and less likely to leave, especially if they have paid off the home mortgage.
-Insurance for the homes

I’m not saying you should or shouldn’t do it, just pointing out some additional factors to potentially consider.


Thank you I appreciate your thoughts


Financially you would be better off and have far less maintenance issue to sell the park and invest in a multi unit apartment building.
Owning/maintaining that many individual rental units defeats the purpose of investing in parks.


I don’t know why you do the math for ten homes, just do the math for one home! 800 rent, $48k cost. Right?
You’re expecting to use 21st CASH program so finance $38k (or more). You claim 10 year payoff. $38k@8% for ten years is monthly of $461. Don’t forget taxes (~$900? So $75? per month) And insurance ($1200/yr or $100/mo) one month empty out of twelve, you can make money but wow you won’t see it for a while.

You can count on some cash flow because $800 > $630, but you’re going to have maintenance (and vacancy) between tenants. And the rehab costs hit hard because they come with vacancy costs. Especially when you have a stack of these things. So your vacancy is wildly optimistic over ten years average IMO.

The economics of renting at $800/mo give you a very slim margin for vacancy, unexpected rehab, and very real depreciation. Very slim. This is about 100% of the real work of being a MHP owner.

You also neglect that you’ve sunk $100k or more into the new homes over the ten years.

But your thinking is absolutely correct. This is how you solve your problem.


Operationally, you should bring the homes in under CRP so you can occupy them. You can still sell them under the CASH program at new home financing for up to 3 years after you bring them in. It’s very difficult to do CASH transactions on homes where you can’t put a tenant in the home until the process is complete (45-60 days). Under CRP, you can put them in as a renter while they wait for approval. If they don’t get approved, then you just keep them as a renter and try to sell it on the next turn.



Thanks for your input. I’m not familiar with CRP. What is the full name of the program so I can do some research?


Im not 100% sure but i think CRP is community rental program.

@Brandon awesome reply.


Community Rental Program:

This page perfectly captures it, " IS YOUR CUSTOMER NOT QUITE READY


Brandon you are correct. I did not include taxes and insurance. 21st wraps those into the mortgage payment so that would bring the mortgage payment up to around $595 per month for 10 years. 10 years is the amount of time they finance for the CRP so yes after 10 years the homes will paid off. So there will be $800 - $595 = $205 in cash flow per month. This will be wiped out after vacancy and rehab costs. For what its worth I employ a manager/maintenance man so some repair/maintenance labor would be paid for already through his annual salary.

I also agree the vacancy of 1 month per year seems optimistic, perhaps 2 months is more realistic. I do seem to be in a strong rental market.

If you look at my post I did account for sinking in the $100,000 into the new homes. The $100,000 spent on Setting/Install is the $100,000 theoretical down payment with the cash program. I should have worded that differently. If I used a bank to finance this purchase and not the cash program I would expect the setting costs to be financed as well and I would need to put down around $100,000. I would also expect a better interest rate.

Cash flow would be nice but is not my top priority. My top priority is filling up the park and increasing the value of the asset and eventually getting strong cash flow.

After Brandon brought me back down to earth my new more realistic math seems to be:

$800 rent - $595 mortgage/tax/ins = $205
$205 x 10 months (2 Month Vacancy) = $2,050 x 10 homes = $20,500 annually

To be very pessimistic say that $2k per home per year of profit gets wiped out by repairs and maintenance. Also note I take a $1,000 security deposit for each home. That means I am breaking even for 10 years which is not great by any means. However, year 11 everything explodes. I am 32 years old and I am not selling the park and not buying an apartment building instead.

10 years down the road my $325 lot rent could very well be $400 x 10 lots x 12 = $48,000 net income @ 10 Cap = $480,000 increase in asset value - $100,000 investment = $380,000 gain + $250,000 worth of home inventory I can sell = $630,000 plus now I make an extra $48,000 in net income every year I would otherwise not have. Extra expenses are marginal at best on those extra 10 lots and note I used a 10 cap valuation not an 8 cap.

That’s $63,000 for every year of the 10 years I broke even to get there it just comes all at once.

I wish my park was in Minneapolis and I would not have this problem but it is not. I know many other park owners must be in the same boat as I am. @CharlesD would you offer them rent credits and when they have the $5,300 down payment sell the home? I seem to have a hard time with rent credits because I feel like I am just giving the tenants money for free and they have nothing in it themselves. But business wise what you are saying may be the most sound decision.


It it were me, I would hold their downpayment in escrow with a contract pending the sale to coincide with their loan closing. I’ve not done this program personally but it has been suggested to me by other owners.


The problem in my market is finding people with $5,300 for a down payment. That has been extremely difficult so far. Much easier to find buyers of used $20,000 - $25,000 homes. I even have had multiple people wish to buy $20,000 - $25,000 homes with cash rather than drop $5,300 down on a brand new home for $53,000.


Then you should buy used homes and not buy new homes. First Bank (formally Clayton) can finance you used homes. Then, assuming these can appraise for at least $23,400, you can sell your used homes through CASH. (it says $10k in their marketing but they really mean $20k)

The downpayment becomes $2,300 with a used home which may be more ideal for your situation.



You have a great example here because everyone else is in the same boat with different numbers.

The $100k I mentioned is R&M through the years ($1k per home per year), not including the $100k d/p.

Great. I said $636, they say $595 per month (including taxes and fees). Maybe you are getting a better interest rate.

You still have mortgage payments during those two months of vacancy. So you are at $800 * 10 months less $595* 12 months which leaves $860 per home per year, which your R&M will eat up the entirety of.

It is in the nature of risk-takers to believe the optimistic outcome is likely. Your pessimistic outcome is very likely and not pessimistic at all. I would say it’s about average or better than average. You will lose money on the homes. Just accept that fact and look at the deal in the long run. After you pay off the 21st purchase loans you will own the homes (however much they are worth) and the park will be worth more and cash flowing more. You will eventually (you hope!) put the homes in the hands of customers who can take care of them and pay you a (payoff or lump sum) that makes it all (barely) worthwhile.

The numbers can vary a bit, maybe you average a little better than 10 months of occupancy, and you also get to boost rent as the economy dictates while your mortgage payments stay the same. But my point, which is essential, is that the increase in value in the park due to the increased lot rent annuity (occupancy) is offset by the doggone cost of getting it there.

Sure you can bring the homes in at breakeven and your park is worth (say) $35k more for each home brought in. But you are really bringing in homes at a loss (or at best very low EV and very high variance) and your park may be worth “more” when you’re done but it’s only marginally more in terms of monthly net (+$385), especially when you figure in the variance on the home costs.

Big picture, again, I am saying you got everything right – you have to buy 10 homes, get the 10 homes rented, convert them to homeowners, and continue/repeat as fast as possible once you know you’re on the upward and not downward side of the slope. Be careful with borrowed money!


That is part of my problem. I would love to purchase a bunch of used homes. Where I am in Southern MN there is very little inventory around and at a price I can afford to pay. Also I am constricted by needing a minimum 30 lb roof snow load rating which limits the areas to the south of Minnesota where homes seem to be cheaper and more readily available. However, they all have 20 lb snow load roof systems.

“In my market it seems the sweet spot is for used homes between $20,000 - $25,000. I have brought in 2 of these used homes so far and sold them and sold another one that came with the park purchase. Problem is they are very hard to find right now and for a low enough price where after I move and re set I can break even around $20,000 - $25,000. So going the used home route will seemingly take forever to fill my empty lots”


Why anyone would pay 21st 8%+ for PG money when you can get a line of credit (also full recourse of course) at 5% or better in this environment is beyond me. Large operators are able to get warehouse lines even much tighter.

I can see the value proposition on the sales side (kind of…), but not on the rental side.

Economics are still challenged, but more compelling at least.


Even if the money is “free” (costs 0%), the economics are challenging. This is the dirty secret of the business.


You are risking far too much on something you have zero ability to predict. You have no idea where your life will be in 10 years with a business plan that will not make money day one. Your plan is based only on hope which in business is simply anther word for delayed disappointment. Keep searching for used homes, they are what your market buyers want.