Is it better to have 1 big park 100+ lots or 2 medium sized parks 40-80 lots?
What would be the pros and cons?
The pros would be portfolio diversity and the cons would be reduced exit strategy, more management cost and financing costs doubled.
Thanks Frank for the quick reply!
Can you go into more detail regarding why the exit strategy would be reduced and the financing costs doubled.
Narf,
I’m going to pop in here. What Frank is referring to is two title searches, two appraisals, two funding fees, two closings.
Now, Frank is smarter than me, but here is my experience - the #1 question asked to me is how small of a park will you consider - and the answer is, the closer it is to my office, the smaller it can be. 
We have two sets of parks that are two miles apart. The one set of parks I want to tell you about - a 58 and a 105 are two miles apart. Although it was two appraisals and two closings, they are both run by the same people. We even use the same lawn mower. So we don’t mind that situation at all - one ad for available homes, one greeter, same plumber, one mower, etc - can service both properties. We like that just fine. If they were 30 min or more apart, we might feel differently.
How far apart are you talking here? Or are you just looking? You will also find - that investors of parks, like investors of McDonald’s rarely have just one. Get a great deal - they are out there.
There are more potential buyers for big parks than small parks. Many of the larger operators will only buy parks that are 100 lots and larger. At the same time, many lenders have better loan programs for larger parks (such as conduit). You would have double the costs of the loan in that you would need two of all third-party reports: phase I, appraisal, survey, etc.
I agree with Brad here – we also have 2 sets of parks that are close together. Each runs its own team (each has a manager, a lawnmower, etc). Although we definitely have increased cost compared with 1 larger park, there are benefits too. We can have one manager cover for the other (vacations, illness, etc.); the “senior” manager can help the “junior” manager; if we have to fire the manager, there is always someone who can cover and/or help train the new person; they operate as a check on each other; they can borrow supplies and/or manpower from each other; etc.
But, there are just exactly the same drawbacks – increased cost compared to a single park of the same gross rental income. A lot of things might be based on the total number of lots (sewer breaks, insurance premiums, etc) but some of the hassles come in a per-park form – it’s the same amount of headache to deal with purchase, sale, permits, zoning, fights with the city about this or that, police presence, neighbor disputes, etc. whether you have a large park or a small one.
There is a benefit to diversity – we had a severe hailstorm (damage in the 6 figures) hit one of our parks but it didn’t touch the one that is 2 miles away. Also, there is a benefit to not having everything in the same economic and/or geographic zone. If the city or local major employer goes crazy, it won’t affect you as much if your parks are not quite as close together. But the more diverse the geography, the less you get the overlap in management, etc.
I think that another of your factors might be “could I expand in this area and would I want to?”
I don’t think there is a right answer – just factors to consider. In the end, a good purchase price and/or upside potential will trump a lot of downsides.
Brandon@Sandell