Park value with seller financed mobile homes


I have some questions about seller financing mobile homes in my park. I am currently starting to put used mobile homes in the park and will be seller financing them. My question is how does this affect my chances of selling the park? Would it be best to sell or rent the homes? Or sell before I do either? I have read the typical formulas used by most here and I get it but the income from those homes will be just as much as lot rents so it does have value.


If you plan to hold the notes then you would want to sell those with the Park. It would be another negotiation point as you will value each note a certain way and the Buyer their own way, and make your sale more complicated, which could also limit your Buyer pool.

An alternative is to sell the notes after you’ve seasoned them for a year or more. You get paid off (80%) of the note value more or less - and you have just another TOH in your Park for a clean sale. Get very familiar with the process to ensure you make these marketable and profitable.

I don’t think you would want to hold the notes (in a different entity) and sell the Park, but that’s a 3rd (bad) option.


@jhutson, Thanks for the advice. So you think going with seller financing is better than just renting the homes? I prefer it as the owner but I was wondering how buyers would perceive it. I will keep the 80% of note idea in mind when it is time. I would like to sell the park with the notes for sure. The park also has a commercial building(s) on the property at the frontage so it already isn’t just a mobile home park with lots. I am just looking to maximize the income level but want to keep in mind that I definitely want to sell at some point sooner rather than later. I think I will list it now and if I don’t get any solid interest right away I will proceed with plans to install mobile homes so I can at least collect the best possible income for a while.


Everyone is different, but it depends how much you want to be in the mobile home repair business. A lot of investors like having low maintenance properties, but there are a lot that don’t mind the POH model either.

The big argument is whether the POH income will appraise as part of the sale, and every appraiser has their own idea how to value an MHP. If it appraises then great, but if it does not then you have to consider selling the homes based on their market value, which would be less than the overall income based value from the home rent component.

You definitely should not let this stop your infill strategy, but it’s good you’re thinking about the exit plan now.

If your park is in Texas PM me, I’d be interested in it. :slight_smile:


Like jhutson said, everyone is different. Yes, POH’s can complicate the sale a bit but most buyers’ strategy will be to bring in homes and fill lots. You doing it gives them a head start… Having a large percentage of POH’s compared to TOH’s could sway a buyer though because, like jhutson touched on, more POH’s means more repair headaches.

It’s a bonus if you can find homes and sell them for cash, which was one of my strategies and isn’t easy but can be done. I spent many hours scanning craigslist for decent homes at a decent price in my area. Next you have to be honest with the seller and tell them you’re a park owner and have significant additional expenses that you have to take away from the seller’s asking price (permit expenses, moving expenses, home set up, skirting, etc…). I got a lot of rejections but was successful a few times - as long as I sold the home for the amount (plus/minus a few $$) I paid for them I was happy.

I sold my park a few months ago and am also in the market to buy - not in TX though…


You should have this conversation with the broker you intend to list the property with since a good MHP broker can usually tweak your strategy to fit his/her likely buyer pool if you involve them a few months prior to the sale. Depending on the market and the buyers in those markets, your home strategy might change. Some markets have high numbers of buyers right now who like the park owned homes. Point being, a broker who specializes in parks within your region will give you the best answer on that question. We have a property in Western, NY where homes sell to cash buyers for $75-$100k. We also have a property in AL where the same home would get $15k-$20k but the rent spread over the lot rent is virtually the same as in NY. I view homes differently in our own portfolio since we only sell to cash buyers in NY and we are ok renting homes in AL.


@tmperrault, But if I stick with the original idea of seller financing the maintenance, taxes and insurance are paid by the buyer. The contracts I had done do not allow the home to be moved out of the park until it is paid in full so I think all that is a good upside to a potential buyer.


@CharlesD, it is way too hard to get cash buyers here. It would be best to do seller financing in my market.


@CharlesD, Thanks for advice on getting a MHP broker. I was talking to a local realtor that I have used for residential transactions but I agree that a broker that specializes is probably best. I went to the and looked up a few for Texas and will call them Monday. I also just got my books for the Bootcamp in Colorado yesterday and hope there’s some good advice in those as well.


@Jsmith I would call Casey Thom with Sunstone MHC . He is really active and knowledgeable in TX (other states too but actually lives here as well). Knows the players and could probably give you a good handle on the best way to do this and has done deals like what you are describing , any obstacles/opportunities with how the notes will come into play.


@Marvel_Equity, Thanks! I will contact him in the morning. I am looking to do the right balancing act here between the options.