Build vs Buy

I am a new member to this forum and have found it to be a wealth of information! I have some experience in the RE Development area where I had an opportunity to make a lot of money. Had I invested those profits in Mobile Home Parks, I would be retired today. I just wasn’t attracted to a mobile home park…it didn’t seem very sexy. I was developing Master Planned Communities with single-family homes, townhomes, apartment buildings…you get the idea. Owning a Mobile Home Park just didn’t fit into that mold. Hopefully, I have learned a few lessons, mainly that INCOME is king…not cash!

I have only recently stumbled upon MHP investing and believe it may be just what I am looking for. I am in the early learning stages, but eager to learn everything I can to make sure I know what I am doing and recognize a good deal when I find one. Your site and forum are very helpful and address many issues.

While I am beginning to see what is available, the RE Developer in me is wondering if I could get a good return on a new site in the right location and economy. I have several investors that are looking for the right opportunity and I am wondering if it is possible in today’s economy, given the right location, etc. The area I am most interested in has a strong growth, low unemployment and a real need for housing. I have met with the City Officials, Department of Development, etc and they have no objection to a MHP in City limits and would welcome the housing.

Any suggestions from you experienced owners?


I would suggest you take a look at this article Frank put together. I think it will answer most of your questions.

Why You Should Never Build A Mobile Home Park

Good luck!


Brandon Reynolds


that response makes me wonder how anyone could think of this as a healthy industry worthy of spending innumerable hours studying and hundreds of dollars on instructional materials

Franks article definitely makes sense and did answer a lot of my questions about building vs buying… I have to say it is a little discouraging and does make me feel the same as DawnA as far as the industry as a whole being healthy…

Can anyone explain why “Virtually every city in the U.S. no longer allows new mobile home park construction” ?? It seems like if affordable housing is in such a demand the cities would want more mobile home parks being built?

I’ve been looking for more resources to explain this… Thanks for any in site on this.

I can completely understand your confusion, as it seems to make no sense that, in a country with a declining economy, the government does nothing to fix the problem, and that, with infinite demand, nobody can seem to successfully underwrite a mobile home mortgage on a new home. You have two different complex issues at play:

  1. Mobile home parks bring property values down. Houses, apartments – any real estate use – is considered less valuable when a park is next door. Since nobody wants to have the value of their property decline, neighbors voice their concern when mobile home zoning is proposed and crush the possibility. If you own existing parks, this is great. If you are trying to build, it’s terrible. The only way this would change would be if the Federal Government mandated that every city has to build a new park or two, but that’s never going to happen. The government hates mobile homes as affordable housing, and only promote apartments for that use (think Section 8).

  2. Mobile home mortgages cannot work in the manner that the lending industry is set up to handle. Mobile home park tenants have terrible credit and small down payments. The lending world mandates good credit and large down payments. The reason that park owners fill this void is that they essentially solve the defaults by constantly replacing bad tenants, and use some of their value from an occupied lot against any shortfalls. I was around when the industry sold 400,000 homes per year (versus 60,000 today) and probably 50% to 75% of those loans went bad. All those repos ended up being bought by park owners and the owners figured out how to solve the riddle. The main reason that this problem will probably never be solved is that the park owners GET THE OFFSET OF OF THE VALUE OF THE OCCUPIED LOT, while the bank has no upside other than its interest on the loan – so only the park owner is willing to hassle with bad credit, low down payments and constant default.

Both of these points are huge generalities. There are many, many tenants who have good credit and never default. And there are some cities (not many) that have allowed new parks to be built in the last decade. But this is a giant industry, and those are the basic norms.

21st Mortgage has a in-park home sales finance program that looks to have the right key ingredients. It is recourse with a sliding scale determined by down payment and credit score…which would serve to rein in the park sales operation from selling high end houses to our most risky customers.

This program has been around for 8+ years now. I signed up and tried it…once. The process is cumbersome and slow, and they structure the deal the way they want, without input from the dealer/park owner who is on the hook if the deal goes bad. That having been said, it looks like it should address the risks to the lender and free up cash for the park owner.

I read the article on Why You Should Never Build a MHP with great interest and I appreciate the great insight.

I agree with you, Mrbg79, I too am pretty disappointed! I had not done a considerable amount of due diligence on this concept when I first ran across your sight, so this will be very helpful to me.

The area I am moving to is in the midst of a huge growth period and housing is extremely short. Therefore, when I first ran across how profitable the MHP industry is, I was delighted! In recent discussions with the City officials, they are pro-growth and would not discourage a Mobile Home Park. My investor is definitely considering the concept; however, I can see there is much more research and number crunching to do. I may end up having to abandon the idea.

Nontheless, I will definitely be looking for an existing park for myself to supplement and build my retirement. I can clearly see this business is very lucrative if managed correctly. Great site, and thanks for all your input!


In the end, the park must be profitable. My hope and desire was to fulfill a need in the community and make a healthy return for my investor and myself.

Jeannie -

Surely there must be an existing MHP in/near that town for you to buy…