Interesting deal!

This is big boy territory for me now.

Park is on city utilities
250,000 population city
25% increase in population in past 10 years
4.5% unemployment
high demand for affordable housing

80 unit park 90% occupied
all park owned homes****
avg lot rent in the area is $250-$275

selling to me for either $1,125,000 and they will hold 20% 2nd for 15 years at 4% interest
or selling to me for $980,000 and they will hold a 10% 2nd for 15 years at 7% interest

I have bank financing that will allow me to do this deal and have them hold a 2nd.

  1. Should I buy this park?
  2. Best way to go about with the park owned homes? From what I have heard from Frank before is to go knocking on each door and asking them to buy the home or we won’t be able to renew their lease. I would probably have to move to this city for a year.
  3. Which option should I take? Higher price but I have to come less out of pocket and have a 15 year low interest rate or take the lower price and try to find some money. I have all my money ( about 1 million net) tied up in 2 other parks and single family homes. I could probably come up with money from either a Line of Credit or hard money cash out if I really needed to.

My goal is to move there, sell all the homes. Get at least $2,000 down for each home… getting me around $150,000, get lot rent to about $275, cash out refi and pull out about $500,000 still keeping the sellers 2nd if I chose the 4% interest. Then using the hopeful $500,000 to buy another park even bigger.

This deal has a lot going for it. The plan would be to sell off the homes, set the lot rent at $270 per month (no reason to not be top of the market since none of the homes can move out if you structure it correctly), push the water sewer back on the tenants, and you’d have a park worth around $1.6 million at a 10% cap rate. Here are some observations:

  1. Take the $980,000 option. The other option is not worth a $140,000 premium.

  2. You do not have to physically be there to sell off 72 homes. You can do that with a manager if you have the correct systems and manager them properly.

  3. The biggest part of your diligence on this deal needs to be on the homes. You need to build a grid of each home and what condition it’s in. You need to make sure they are all in pretty great shape and that you can sell them for cash or rent/credit them for an amount equal to what you are going to have to sink into them in renovation costs. This deal looks a whole lot different if you have to spend $6,000 to rehab each home – turning this into a $1,500,000 price overnight.

  4. Make sure that your test ad pulls very strong – as you need a ton of demand to pull off this project.

  5. Make sure you only hire a great manager, as this is the type of project that will not succeed with weak supervision or sales skills.

  6. Make sure to get your dealer’s license and any related permits in advance.

We’ve done deals like this in the past, and it’s not a bad plan of attack. But you will succeed or fail based on how good you estimated the home condition, the demand, and selected the manager.

I forgot to add that you need to make sure that every home sold requires the buyer to sign an agreement that ensures that the home cannot be moved for five years. That will scare off any park or other buyer from trying to move one out. Have a competent attorney write that addendum for you, and make sure that it’s binding in your state.

@narf , as per your post:

  • “Interesting deal!”
  • “80 unit park 90% occupied”
  • “all (80) park owned homes****”

First of all @frankrolfe (who is extremely knowledgable) said:

  • “This deal has a lot going for it.”

Thus, it has Frank’s approval (which means a ton).

My Husband and I have 2 MHPs with a total of 15 Park Owned Homes.

I am very conservative.

Personally, I would not want to own 80 Park Owned Homes.

I understand that your plan is to sell off all the Park Owned Homes to the existing Tenants.

However, do you really even want the existing Tenants in the MHP…let alone own one of your MHs?

You indicated that you would like to get at least $2,000 down for each home.

I would be very impressed if the Tenants had $2,000 to put down on a MH.

Obviously, @frankrolfe has done this before and gives your deal his blessing.

Frank is absolutely wise, knowledgeable and experienced in MHPs and to give his blessing means a lot.

Just personally (as a very financially conservative person) I would pass on this deal, but that is just me.

In addition if you have to do some renovations on the Park Owned Homes, it might take longer than you anticipated/scheduled.

We have coordinated renovations (various levels) on all 15 Park Owned Homes and it takes a lot longer than anticipated/scheduled (this is with me staying on top of them through emails/texts).

We wish you much success!

Both Frank and Kristin are correct. Selling a lot of POH can be a TON of work and can be VERY capital intensive if the homes need a lot of repairs.

I’m doing a very similar deal right now here in FL with 69 POH and the vast majority of the homes need rehab work. It’s very time consuming and capital draining.

Frank is dead on when he says it’ll take a good manager, but those are VERY hard to find. I had a very bad manager but was fortunate in that my brother agreed to move into the park and take over with his wife in exchange for salary, a home and a small percentage (I wanted them to be motivated.).

He has the park turned around now and the progress is very good.

Kristin is correct that getting $2,000 down from existing tenants isn’t likely at all. They have no money, that’s why they live in a MHP.

Bottom line is the most important thing Frank said is the deal depends on heavy demand. Your test ad is key. Very strong demand is why I took on this enormous project, the demand has to be there or run, don’t walk.

Your setting yourself for FAILURE before you even start.
You are relying TOO HEAVY on the Financing and the exit plan of the Financing.
You cant rely on a BANK being your answer .
NEVER BUY A PARK, with short term financing! ITs ok to HAVE LONG TERM financing but be very careful.
5, 7 or even 10 years goes by so quick it will make your head spin.
People are buying things up right now at ridiculously low CAPS only because financing is so cheap.
But they are in for a wakening when they have to refi and their equity didn’t climb like they thought it would.
Just like 2007!
But what happens when rates go back to the normal 7 -10%. Nobody knows what rates will be in 7 years.
Most loans are 30 years, YES BUT THEY ARE only fixed for for 5-7 years then become adjustable. MAKE sure you run the 7 year rate( which is a guess)( I always run 8% to be safe) and make sure you can still afford the payment . NEVER GET A SHORT TERM LOAN
Just be careful , I would hate for you to loose your park after working so hard and your notes come due and you cant qualify personally or even your park doesn’t qualify, because the banks changed their guidelines.
And the bank or even the previous park owner forecloses.
Good luck- and think long term on everything .( and like the previous people stated! most don’t have even an extra $100 bucks to throw your way, so your plan of getting 150k is out the door. I sell all mine on contract at 0% financing for 12-24 months. AS I just want them out of my life and 0 responsibility.

I have done about 10 test ads on mobile home parks through my mhp journey. Through the 2 I own and the ones that I wanted to put under contract. All of them had great demand. All of them are the same. ($5,000 mobile home, $1500 down 0% $100/month)
None of them were in a location this good in terms of statistics (increasing population, size of population, unemployment rate etc).
I put the ad on. And I was ready to put the ad off in a couple of hours from the sheer amounts of phone calls I would get. However, to my surprise, nothing was going on…?? I only got 2 emails from other park owners that wanted to buy the home and take it out of the park…
The park is located in Fort Wayne, Indiana.
Is there something I am missing here?
I think I am going to have to cancel the deal.
What do you all suggest?

Any ideas guys? I have it under contract.
Should I just cancel it?
Buy it and just keep the homes as rentals?
Buy and flip strategy?

If there’s no demand then you have to walk. Post your ad here. Also try different CL locations. You’d be surprised. I get as many responses from outside my area as inside. Frank would also suggest trying a newspaper ad in the nearest major city.

Change the AD.
This is no joke.! Emerald Bay Mobile home estates is giving away for FREE some Handyman special mobilehomes and selling the rest of the nice mobile homes at unbelievable prices. Starting at only $50 per month in addition to your low lot rent of only $250, you and your family could own your very own place in less then 2 years. Emerald Bay Mobile home estates is the kind of place you will love to call HOME. Located just 3 blocks from Wal Mart and , 1 block to Sunny hills elementary, Emerald Bay mobile home estates is that place you have been waiting for. ONCE in a lifetime opportunity to get your new home today. Call Fast as we only have a handful.
then blah blah blah. or whatever elseyou want to put.

and watch your phone ring off the hook.
ITs all in how you word it.

I personally never add any value to anyhome in any park. IF you can live with knowing that its just a shortterm few extra bucks the go for it.

Yeah I can probably get that going.
So just fill her up and sell it in a year for an extra 300k? I think it’s too risky to keep it long term with no pull for even a 1k down deal.

Bad idea. Advertise free homes and all you’ll get are vagabonds and every broke loser out there.


If you go forward with that approach as Coach states you will have the dregs of society occupying the community. Remember the more it costs to get in the better quality of residents you will have. You can own a MHC or a drug infested Trailer Park, your choice.
If you do take this approach you had better be ready to flip it immediately before the value drops to zero.


Yep, even my handyman specials that I would LOVE to give away I demand at least $1,200 down and home payments for at least a year. It’s not about the home money honestly, it’s just about weeding out those that can’t come up with $1,200. Think of it this way, if you have to evict them and they have $0 in it, you just lost your ass. At least the down payment will cover the eviction costs.

Coach, your missing the point.
Marketing 101- make the phone ring, get the people in the door.
I would rather have 100 calls, 40 people stop by and then 20 applications resulting in 1-4 possible new tenants.
then have 10 calls 2 people stop by and 1 application.
Everything is a numbers game even our business.
Who said the applicants get to walk in with $0 out of pocket?
we require first and last of total monthly including utilities, and we have always got it.
Your comment about using the word FREE, gets every loser on the planet is TERRIBLY WRONG.
Its a keyword, and everyone of every economic status likes the word FREE.
Have you ever responded to an ad that said FREE, or looked at anything in passing that had the word FREE on it? The answer is probably yes, I know I do all the time. ARE YOU A LOSER? Probably not! Nor am I, But We LOOKED, and we were curious so we called, or stopped.
Always remember , There are many right answers!
Everyone should always advertise on Craigslist in the FOR RENT SECTION , FOR SALE SECTION and FREE SECTION. Business is a game. and the better we play the game the better we do.
hope everyone has a great day!

I would rather weed out the deadbeats up front than field all their phone calls and show them through the property - I don’t want to do that work and definitely don’t want to pay someone to do that work. @Coach62 and @Greg’s approach has a higher likelihood of producing a quality tenant and less turnover = more money and less work. More calls does not equate to more quality applications when you’re clear about what’s expected up front.

Sorry guys, I was on the road.

The test ad should read NAME OF TOWN OR SCHOOL DISTRICT IN ALL CAPS. 2 and 3 bedroom mobile homes for sale or rent from $495 per month – includes lot rent. (XXX) XXX-XXXX. Se Habla Espanol.

Now you are going to have to tailor make this ad to fit your target park.

Run this ad in the largest metro newspaper classified ad section under “Mobile Homes for Rent”. Also run an ad on Craigslist (wording can be more flexible).

Track the call and see what you get in a 10 day run. You should typically get 30+ or nearly zero. If 30+, then you’re typically in great shape. If nearly zero then cancel.

Here’s our metric: we get 1 showing for each 3 calls, and 1 closing from each 3 showings. So 9 calls = 1 sale or rental. At 30 calls, you would have the capability to sell/rent 9 homes per month. Then half that for safety, and you’re still healthy enough to get a good number of homes out the door each month.

Troutt business 101 is getting the right people in the door. Time is money and money is wasted targeting the wrong market. If you base your response volume on a add that does not target the clients you want then your call response results can not be relied upon to test the market.
If you are offering free homes then advertise free homes otherwise don’t waste your time or your clients.

Hey @narf - what ended up happening here?

I canceled the deal. Even when I was giving the homes away for free, the calls weren’t that good.
I’m about to go under contract with another park in another city, with great pull from test ads and got a good deal on it as well. I’m excited about this one, hopefully everything goes smoothly.