I’ve been reading a lot here on this forum and am trying to learn more. I come from a SFR rental background and don’t understand how a park works. I know it seems like a stupd question but I guess this is a good place to learn.
How is a park protected if somebody doesn’t pay space rent? You can’t forclose on the home because a bank or private party might hold the note. Can you just have the home re-moved? Do typical eviction laws apply since you don’t actually own the “home” just the land under it. If the MH owner keeps current on their home payments, what keeps them from being able to “squat” and not pay their park rent?
Other question…Can you depreciate a MH if you use it as a rental? Since it’s not real property, my guess is no. This would limit the depreciation advantage of investment property to the park owned improvements and totally eliminate depreciation for land/home packages where the infrastructure is owned my municipals…correct?
The eviction laws are different in every state. In the States I operate, you can ultimately have the resident’s home removed from the property if they don’t pay. The same type of eviction laws used in SFR apply, but if the resident owns the home you have to pay for the physical breakdown and transportation to remove the home. In some cases, this won’t cost you anything because the mover will take the home to an impound yard and charge the owner or finance company for the removal, plus storage fees. If they don’t pay within a certain period of time, the mover will get the home free and clear.
In other cases, where the home is old, the mover will charge you for this process since it’s highly unlikely that the owner will pay the fees to reclaim the home.
You can depreciate a mobile home that you own. The conservative approach is to do so over 27.5 years, but some owners use a 15 year depreciation schedule and feel like they can defend this figure with the IRS.