Do you usually allow individual mobile home investors to operate in your park, i.e., buying homes, fixing homes, wholesaling homes, moving homes, seller financing homes, guaranteeing lot rent for their tenant, etc.?
I know the park can usually handle all of that, but isn’t the goal to be free of dealing with the actual homes and just have it be a parking lot with consistent lot rent?
If you do allow investors to operate in your park, what do you like about it or how does it make your life easier?
If you don’t allow investors to operate in your park and handle all of it yourself, what would it take to let an investor operate in your park? A cut of profits and someone your like and can work with?
To disclose, I’m a new mobile home investor looking to, hopefully, get started in parks in and around central Alabama. I follow this community and read the content and wanted to get the opinions of some thoughtful park owners on the subject. Cheers!
I wouldn’t see there being a problem with an “investor” owning homes in your park as long as it’s only a small percentage of homes compared to your total number of lots. This way they can’t significantly impact your finances or bully you into giving them concessions on lot rental rates, etc.
I have some MH owners in my parks that sublet their mobile homes to their own tenants. They have to abide by all the same rules as the owner occupants and the houses have to meet the same aesthetic standards as everyone else. Also the sub-lessees have to pass my background check. If I have a problem with something the occupant is doing then I just have to deal with the investor (MH owner) instead of their tenants, which can be more convenient at times.
I agree with @MikeO . I have a few homes for sale in my park right now and I don’t think I would have a problem selling them to investors as long as they are going to be used as a long-term rental or the investor was seller financing them and the occupants are approved by the park.
We’ve done this in the past. Had one OK experience and one nightmare experience (with a newb investor).
Be careful with who you allow to invest in your park. It usually works out fine but the main key is that the investor is held to the exact same standard as the tenant and are responsible if tenant does not pay. Have agreements in writing in place before starting.
A huge factor to consider is the personality and experience of the investor. If they’re new they may not be able to hack it and quit or if they’re difficult to deal with, I’d pass.
The right investors can actually help you get your lot rent, the wrong ones can be bigger problems that the tenants - from experience.
Also ensure they’re not holding more than a few homes in your park so you retain leverage.
I appreciate the input. It seems like the consensus is the investor having a low percentage of homes in the park, hopefully long-term tenants, tenants and the investor abiding by the same rules and procedures and the investor having a good character, i.e., not going back on an agreement or being unreliable.
I spoke with a two larger MH parks in the Birmingham, AL area with multiple parks and they were already renting and doing rent-to-own with their tenants, so that’s what prompted the question. I’m trying to gauge how much of a long shot it’d be to add value to the parks.
Contrary to others I personally do not allow rentals in my community. If someone wants to buy and flip a home that is fine but I have had nothing but headaches from allowing absentee landlords in the past. They do not monitor their tenants and are difficult to deal with as they have no vested interest in the condition of my community. Do not expect the mobile home owner to care about your community rules, they will never evict one of their tenants to please a park owner you will have to evict the home owner not their tenants. PITA.
Additionally I have discovered that mobile home renters tend to be the lowest quality tenants.
Bottom line is I never allow mobile homes to be rented in my community.
We have rentals in one park where guy owns 2 and then his own home. Owned all three when I bought the park. We consider him grandfathered and do not allow new rentals. We have worked with folks who flip the homes or develop the pads and sell off the homes too. Not every market supports that model.
We have park where an investor owns 2 homes. Our model is, the owner of the home (in this case the investor) is responsible for paying lot rent and ensuring rules compliance. In the case where rules are not followed, investor/owner is subject to discipline and they are responsible for their tenants’ actions. In general, the model has worked well.
Over the 5 years we’ve had this arrangement, we’ve had some small issues but overall things have good. Investor pays on time and is fairly responsive to our inquiries and requests. I would say it always helps if the investor maintains a good relationship with the Park owner/manager, and is responsible to any issues that arise. It is also helpful if they thoroughly screen their tenants - saves us all much hassle in the future. Generally speaking, we are modest in our secondary screening efforts (once investor approves their tenant, they forward the information to us). We know of some Parks locally that are much more specific and stringent on acceptance criteria of tenants. Also, I believe most of our investor’s tenants are doing rent-to-owns, so their tenants have more skin in the game.
@Greg , some good points raised. Generally speaking, I agree with you - the absentee landlords could do a better job monitoring their tenants, and have less of a vested interest in the community. I present a solution. We issue fines when the investor doesnt heed our warnings or requests. Eventually, they fall in line, as it only hurts them financially. Money talks.
In the past, we’ve charged “Sublet Fee.” This is a essentially a management fee to pay for the administrative burden of dealing with 2 parties (tenant and investor), and managing the complexities of this situation. Due to relationship longevity, we did start waiving this fee at the request of the investor. However, at any time, we can reinstitute.
If you have to evict, its simply “[Investor Name] et al”
My experience has been mixed. Right now its very good. I’ve got couple of guys hot to get into the manufactured home business. They have been buying problem homes from me or from my tenants, fixing them up and flipping or renting them. They have found very good quality tenants, perhaps my best ever, and have solved a lot of problems. Example, I managed to evict a drug dealer who had been ruining my park for years. The little shit box cars with loud exhaust and boomer sound systems were coming and going like a Mickie D. So then I had this vacant junk home just ripe for squatters. I hired an expensive lawyer (the only one I could find to deal with it) , paid him $2500to file an abandoned property procedure so I could get ownership for the privilege of demolishing it. The partners stepped in, visited the drug dealer owner in jail and bought it from her, have put a lot of work and money into it, and now I can collect lot rent again. The lawyer hadn’t done a thing yet in the month and a half he had it.
I have had other sub letters that were a nightmare and had the poorest tastes in tenants.