Hi guys, I’m new at this mobile home park investing concept but have been reading Frank and Dave’s Due Diligence manual recently purchased. My question is if an owner of a mobile home within a park decides to just up and leave for no apparent reason or perhaps gets evicted due to non payment of lot rent, as a park owner, would I be responsible for that mobile home thus turning it back into a park-owned home again?
When a mobile home is abandoned in a park for whatever reason, the park owner has a methodology to follow to ultimately become the owner through abandoned property laws. While this does not happen that frequently – based entirely on the size and demographics of the park – you need to be in a position to take possession of a home and to get a good tenant in there when it does arise.
Every park owner has their own business model, but ours is that we want our tenants to be stakeholders in our business by having them as homeowners as quickly as possible. We will sell homes received through abandonment at prices that are no higher than what we paid. That means that we often sell such homes from $500 to $1,000, which is a great deal to the buyer. The business model that works the best for a park owner is the one in which the tenants own their homes and we own the land. We never see the home as a profit center, but simply as a conduit to lot rent.
Thanks and that makes total sense. All of your work that I’ve read so far definitely points me in the direction of trying to shed the liability of park-owned homes as quickly as possible. I just wasn’t sure if there was any special or new paperwork I would have to do if they vacate.
To add to Franks comments what you do in regards to shedding of homes, as in selling to residents, you need to be conscience of the demographics of your community when doing so. If you own a trailer park you can sell off the homes at cost as the park will dictate the quality of resident. If however you own a MHC you need to price the home as high as the market will bare to insure you get the best quality resident possible that is socially compatible with the community.
We have found that there is a buyer for every home and we insure that through upgrading the lower quality homes we price to avoid undesirable applicants. Our business model is geared away from the concept of providing affordable housing.
Gotcha, thanks Greg that definitely makes sense.