New MHP Owner - 3 Pad Rentals, 2 Park-Owned Homes

mobile home university
1

My wife and I just purchased a small MHP. It has 5 houses on it. The lot is a mess (three lots) and there are some non-conforming issues as well. Property is in British Columbia.

The park, as-is, generates $25k net on a $250k purchase price. Water/sewer/garbage are through the City and a cost that we cover. Everything else is covered by the tenants/owners.

One of my hopes with the purchase was to try to sell off the two park-owned homes. One is a 1966 Detroiter (10’x50’) currently renting for $750, but soon to be vacant. The other is a 1968 Esta Villa (12’x65’) which is rented for $1200.

I would like to try to sell both. The tenant in the Esta Villa is interested in purchasing and mentioned a rent-to-own approach, something I have never done before. I read up on this a bit and am leery of it - namely because I think the rent premium that would be added would be treated as rental income which means that 50% of it would disappear thanks to federal and provincial taxes. I am in the process of trying to understand how acting as the bank/lender would work. Any advice on which route (or other ideas) would be best??

Second, for pricing: originally I had assumed the Detroiter would sell for about $30k on the market and the Esta Villa would sell for about $50k. We are in a somewhat small market (8000 people here, 30000 in nearby “big city”) and there are maybe 6-10 other MHP’s, at least. Some recently sold manufactured homes sold for $140k, $157k, and $160k - but these are a different age and class and condition compared to the ones I am thinking of selling.

So, what is the appropriate price range for units like this with the understanding that financing for this type of property is challenging?

Thanks for your advice and any other considerations you might have

2

Welcome to the forum and congratulations on getting your first park. A very exciting time for you and your wife. I live in Washington so we are close to being neighbors. Unfortunately you being in BC puts most of us in a bit of a disadvantage not knowing much about your tax structure and zoning.

Pricing old mobiles is tough and comparables are very difficult. Financing is almost impossible and with RTO a 50% tax hit my advice would be to sell them for cash quickly and cheaply. Those are really old mobile homes and the maintenance costs are going to be high. I would play the long game- sell them for 5k to 8k cash while screening the buyers very carefully. Get people in there who will fix them up and take care of them long term. You will take a hit on the rental income side of the park but thinking big picture once they are TOH homes I would start moving the utilities over to the tenants. Garbage first, then water with meters and finally a sewer surcharge.

I will probably get tore up by others for my advice as I am no finance/bank guy- just a ‘mom and pop’ operator but I do know how expensive maintenance can be on old, old mobiles.

Good luck and congratulations on the park.

3

Sorry, but each market is different. Where we operate, we would sell 60-70s models for about $1,000 or give them away for free. Unfortunately, the type of people who like the old fashioned tiny 10’ wide homes are not the best tenants. Anybody who can afford nicer will go nicer, and we found that we are left with those who are bordering the fringe of society. To alleviate these issues, we have been demolishing then when the go vacant and replacing them with new homes.

You will also find that they are hard to maintain. They may have 20 gallon water heaters and tiny furnaces that cannot be replaced with modern units. They sit close to the ground, so it is hard to get under them to repair anything.

If you can get 30k to 50k for one, I would call that a home run. We are selling brand new homes for roughly the higher end of that range in our market.

4

I have one interested buyer on the smaller home (which is the small one and in bad shape). $12k. He wants to do a rent-to-own setup, so I chatGPT’d it and modified some things. I would appreciate any review/insight people can offer here on my T’s & C’s:

RENT-TO-OWN AGREEMENT FOR MOBILE HOME

This Rent-to-Own Agreement (“Agreement”) is entered into on this __ day of __________, 2025, by and between:

SELLER/OWNER:
Name: _____
Address: __
(“Seller”)

BUYER/TENANT:
Name: _____
Address: __
(“Buyer”)

Collectively referred to as the “Parties.”

1. PROPERTY

The property subject to this Agreement is a mobile home located at:
Address: ____________________________________________
(“Mobile Home”)

2. TERM OF AGREEMENT

This Agreement shall commence on November 1, 2025, and continue for eighteen (18) months, ending on April 30, 2027.

3. PURCHASE PRICE & PAYMENTS

Total Purchase Price: $12,000 CAD
Non-Refundable Deposit: $2,000 CAD (due by November 1, 2025)
Remaining Balance: $10,000 CAD due on or before April 30, 2027

The deposit shall be credited toward the final purchase price but is non-refundable under any circumstance.

4. PAD RENT

During the term of this Agreement:

  • Buyer shall pay monthly pad rent of $350 CAD, due on the 1st day of each month, beginning November 1, 2025, and continuing through April 30, 2027.

  • After April 30, 2027, if Buyer continues to reside on the property, pad rent shall increase to $375 CAD per month, unless otherwise agreed upon in writing.

  • Pad rent includes:

    • Water

    • Sewer

    • Garbage removal

All other expenses, including but not limited to electricity, gas, internet, lawn care, snow removal, and any other park-related fees or responsibilities, shall be borne solely by the Buyer.

5. POSSESSION AND RESPONSIBILITY

Buyer shall take possession of the Mobile Home on November 1, 2025. As of that date, Buyer assumes full responsibility for:

  • All repairs, maintenance, and upkeep of the mobile home as if they were the owner.

  • Ensuring the Mobile Home remains in habitable and well-maintained condition.

  • Any damage or disrepair caused during the term of this Agreement shall be the sole responsibility of the Buyer.

6. INSURANCE

Buyer agrees to obtain and maintain adequate insurance coverage for the Mobile Home and its contents beginning no later than November 1, 2025. Proof of insurance shall be provided to the Seller upon request.

7. DEFAULT

If Buyer fails to:

  • Pay pad rent as agreed,

  • Pay the final purchase balance of $10,000 by April 30, 2027,

  • Maintain the Mobile Home in a reasonable state of repair,

  • Maintain required insurance, or

  • Otherwise breaches the terms of this Agreement,

Then Seller may consider this Agreement terminated due to default, and:

  • Buyer shall forfeit all payments made, including the non-refundable deposit and pad rents;

  • Seller shall have the right to reclaim possession of the Mobile Home;

  • Buyer shall be liable for any costs to repair damage or disrepair beyond reasonable wear and tear;

  • Any legal remedies under the Manufactured Home Park Tenancy Act and other applicable BC laws may be pursued.

8. TITLE TRANSFER

Upon receipt of the full purchase price of $12,000 CAD, including the deposit and final payment, and provided Buyer is not in default, Seller agrees to transfer legal title of the Mobile Home to Buyer on or before May 1, 2027.

All title transfer fees and registration costs shall be borne by the Buyer.

9. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia, including the Manufactured Home Park Tenancy Act and other applicable provincial laws.

10. SUBLETTING

The Buyer shall not sublet, assign, or transfer possession of the Mobile Home or any part thereof without the prior written consent of the Seller. Unauthorized subletting shall constitute a breach of this Agreement and may result in termination and forfeiture of any payments made.

11. LATE FEES

If the Buyer fails to pay monthly pad rent by the 5th day of the month, a late fee of $50 CAD shall be applied. If rent remains unpaid after 10 calendar days, the Seller reserves the right to initiate proceedings under applicable tenancy laws and consider the Agreement in default.

12. DISPUTE RESOLUTION

In the event of a dispute arising out of or relating to this Agreement, the Parties agree to:

  1. Good Faith Negotiation: First attempt to resolve the matter amicably through direct discussion.

  2. Mediation: If a resolution is not reached within 14 days, the Parties agree to submit the dispute to mediation in accordance with the BC Civil Resolution Tribunal (CRT) or another mutually agreed-upon mediator.

  3. Legal Action: If mediation fails, either Party may pursue legal action through the appropriate court or tribunal in the Province of British Columbia.

Each Party shall be responsible for their own legal costs unless otherwise ordered by a tribunal or court.

13. ENTIRE AGREEMENT

This Agreement constitutes the entire understanding between the Parties. No oral statements or prior written material not specifically incorporated herein shall be of any force or effect.

Any amendments must be in writing and signed by both Parties.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

SELLER/OWNER SIGNATURE:

Name: __
Date: __

BUYER/TENANT SIGNATURE:

Name: __
Date: __

5

I am not sure how that works in Canada, but that is a very risky agreement in the United States. It comes across as an installment agreement (or loan or mortgage). You specifically use the term “balance” which implies debt. Mortgage debt goes to superior court and not small claims court meaning you have to hire a more expensive lawyer for non-payment, and it takes longer for a court date. Also, you have a $2,000 deposit which may be illegal in some jurisdictions because the deposit is sometimes limited to 1 month rent in some states for a residential lease.

Also, seller financing in the United States is illegal under the Safe Act unless you are selling it personally, which you are not if the LLC owns the home.

Are safer scenario is to have a Lease-Option which are two separate agreements. There is the rental LEASE and the OPTION to purchase. Rather than paying a $2,000 deposit, you may have a $700 rental deposit as part of the lease and a $1,300 Option fee for the right to buy the home in x number of months for a predetermined price, which can be $0. If the tenant defaults, they are in default under the LEASE meaning you can evict traditionally. In fact the Option has no monthly recurring charge - only the option payment at the beginning.

Of course, you are in Canada, so some of this may not apply.