Generally, what is the oldest home that you other park owners are allowing to move into your communities?There are a couple of other parks in my town that have not renewed leases on tenants owning homes that were built in 1994. These homes have metal siding. The tenants have contacted me about moving them into my park. The park owners have informed the tenants that they are not renewing their leases because they are wanting to upgrade the housing stock in their communities. I know the condition of the home is more important than the year it was built. But do any of you have a cut off year, say… anything built before the year 2000 will not be accepted? With these two homes being twenty years old, I’m concerned that I may be accepting homes into my community that will rapidly fall into disrepair and then I will be faced with the issue of having to pay for the cost of removal myself.
You need to investigate the building code requirements in your area to determin age restrictions. If you bring in a home that does not pass code you could easily be stuck with the home and associated cost to upgrade or remove.
In addition you need to consider the quality of tenant you wish to attract to your community. The lower the value of the homes the lower the quality of your tenant demographic.
In our area building codes have changed to the point that we do not accept any pre owned homes. It must be new and delivered direct from the factory.
Greg makes a great point to check the code requirements. I will say, after lurking this forum for quite some time and reading the home study course, I do not think, Dave and Frank, for example put such restrictions on age of the homes. I hope they jump in to correct me if I am incorrect. I am believe pride of ownership is far more important than age of the home. I also have seen Frank state that they would prefer older homes as there is usually no mortgage or large mortgage attached to the home. It is, however,your preference,but I am sure there are plenty of park owners that will take any homes you turn away because of how old they are.All The Best
I have been on the road for two days looking at parks, so I apologize for not posting sooner.I don’t mean to shock anyone, but we look at things completely differently – but it all depends on your business model, obviously.We prefer older homes over newer homes, as the only one who can afford to move a home out of our parks is the bank, and we do not want any to leave. So we like homes that have no mortgage and, as a result, no danger of the bank repo man. Once a home has no lender lurking around in the background, the odds of it ever leaving the park is nearly zero.At the same time, you cannot bring in homes that are non-HUD code (1976 and older) as most cities won’t allow in a home without a HUD seal affixed to the rear.So our favorite type of home is 1977 to whatever age is paid for. Since mobile home mortgages were only 15 year in duration until the late 1990s, any home from about 1995 backwards is debt-free in most instances.When a customer brings in a new home with a fresh mortgage, we know that there is a good likelihood it will be taken back out by the repo man. However, a lot of this risk is geographic, as customers in the northers states rarely default, while customers in the southern rarely don’t default at some point.As far as aesthetics, a well taken care of home from any era looks better than a new home with no pride of ownership. I can show you a thousand examples of this in our parks.There are parks out there that have age limitations, and they’re doing fine. It’s just a different business model. Ours is classic 100% affordable housing. But this industry is large enough that there are many niches that work.
In the last five years only new homes. When we develop a group of new sites 5 years old or newer. In certain areas if a home comes up for sale and is over 23 years old it is removed with a new home since we want to attraction retire people and people wanting a get-away home in a park that is exceptional!
Our market is the opposit end of the mobile home market that Frank specilises in. We are mostly renting to middle income retired or preparing to retire residents. We do not rent to low income applicants.
It all goes to your area, tenant demographic and business plan. Once you know your target market you will know exactly what direction your park is to take. If you are looking at newer or new homes you will also want in place extensive rules on standards of up keep that need to be rigidly enforced.
The advantage of new homes is the buyer can get a conventional mortgage where as with a used home they can only qualify for a personal loan.
Affordable housing to us is a relative term. In our area affordable housing is in the $70,000 to $120,000 for this demographic. To attract the residents you want you must provide the housing they are looking for.
ELS is in the same business as Greg. They sell 90% of their homes for cash, to mostly affluent retirees that want to downsize and reduce living expense (and sell their stick-built home and put money in the bank). We have the utmost respect for Sam Zell and ELS and recognize that they are in a completely different business model than we are in. That’s why my article in the Journal this month “The New Face of Affordable Housing” discusses that affordablilty is in the eye of the beholder, and a $1 million mobile home in Malibu is affordable housing for those who can’t afford the $10 million beach house.Thanks Greg for pointing this out.