What are your thoughts regarding buying a park with investor owned homes? I’m looking at a park where about 1/3 of the lot rent is paid by 2 people who own several homes in the park. Should this be a concern? My thought is that this would make this park investment a more risky proposition since, if one of them decided to stop paying because the investment wasn’t panning out, I would run the risk of losing substantial revenue. Is this one to stay away from? I should mention all homes are lot rent only. Thank you for your feedback!
This is a concern, but not a deal-killer. If there are other parks nearby with substantial vacancy, then these investors could pull their homes out of your community and go do business with the other park owner. If your area is 100% full, then there is less chance of this. This is a grey area. You might try signing long-term leases with the investors to get their commitment to leave their homes in your park for 5 years or so. You can build-in some escalation of the rents with inflation or as you can negotiate it. And/or you might negotiate a right of first refusal to buy the mobile homes if the investors would otherwise pull them into other communities.
A park like this is ‘worth less’ than a park with all owner/occupant occupied homes, but the park is not ‘worthless.’
Good luck,
-jl-