New MHP investor - Advice

Hi, I am a new user here and also new to MHP investing. I am considering a park in urban area in Texas. This park is fully occupied and there are no park owned homes. The income coming in seems to be good and there is a good potential for land value to increase as this is in a very matured urban area.

This park has mostly single wides that seem quite old. My initial research indicate that city does not allow new MHPs and also do not permit a new mobile home to be brought in if a home is destroyed or if a home does not pass inspection for existing home. Can this be true? What would be the scenario if some homes are destroyed in fire and there is no way for anyone (by park or individual) to bring in a new home. Can the City restrict a home owner or park to bring in a new home? I am not sure if this is real but what to check with experts here. I would also like to know if insurance covers income loss and for how long?

Thanks for you response!

I’ve never heard of anything so draconian as a City saying a park owner could not bring in a new home into a park (assuming the MHP is ‘conforming’ - that is, zoned to be a MHP). If the MHP is not supposed to be there (nonconforming) - then you don’t have a deal; you have a liability. Or a redevelopment opportunity - but that’s a whole different ball of wax.

The ability for you to replace mobile homes is a key point of your due diligence that you must get right. You should read the MHP zoning ordinance in its entirety, and probably get the advice of an attorney. What you could be mis-reading is a ban on pre-HUD homes. Homes built prior to 6.15.76 were built to a lower safety code, and Cities do often block those from coming in. But that is not really an issue; most of us infill our parks with 1990-and-newer MHs.

Regular fire/flood/wind insurance on MHs does not cover loss of business income; it only covers loss to the structure. Loss of Business income is not worth purchasing. If your entire park was destroyed, LBI only covers your losses until your first home comes back in. Then the insurance company declares you ‘back in business’ and they stop paying you - even if you’ve only filled 1 out of 100 spaces.

Your key issue to focus on is whether you can bring in ‘new’ mobile homes (really any MH 1990 or newer), and what the size is of the lots. Many urban MHPs like you describe were built back in the 1950s when MHs were only 30’- or 40’-long. If you have short lots, you may need to combine two for a doublewide more modern home. It is difficult to find anyone interested in renting or RTO-ing a 1950s small MH.

My 2 cents worth,