Rent Credit Model

Hello everyone,

I am trying to better understand the rent credit model.

If new 3br/2ba Mobile Homes rent for around $850 plus utilities.
Lot rent is $300.
Home rent is $550.

Assuming new homes run around 38k including transportation, set up etc.
10k Down
28k Finance 10 years 10%

Mortgage: $400
R&M: $90
Tax/Insurance: $60
Total $550

It seems I would be breaking even on the home rental side. Although I collect my full lot rent.

If I offer Rent Credit at 50%.
$550/2=$275a mo.
Then after 10 years they would have 33k in rent credit plus 2k from initial deposit.

I then could sell the home for 35k since it is paid off by then.

So I am looking at paying 10k out of pocket from initial down payment.
To receive $3600 in annual lot rent.

Or I could rent for two more years after the home is paid off collecting all $400 that was originally going toward mortgage of the home. $400x24mo=$9,600
This would reimburse me for my initial 10k investment.
After 12 years they would have saved up 39,600 in rent credit plus 2k from initial deposit.
So I can then sell the home for 41,600.

Do either of these models look good?
I have seen that some people add the costs of repairs to the purchase of the homes.
If this was the case then they would not be able to buy their home until after 15 years of renting at projected R&M costs.

How does this model look and compare to what you have seen?
Please let me know If I am missing anything.



Why not simply sell the homes and let the buyers find their own financing. That is what all home owners ultimately do when they sell. This will also attract higher quality residents.
Change your business approach from affordable housing (low income) to economical housing (middle income).


That would be ideal. However, I am under the impression that mobile home financing for personal buyers is hard to come by these days. Otherwise home owners would be moving in their own homes.
Instead most of the mobile home lenders would prefer to lend to the park owners.

I am aware that mortgage 21st has the used home program that works with financing the buyers directly. I also have heard there are some small niche banks that will finance mobile homes. If I can pay to move homes in and then be reimbursed all at once that would be great. Have you had success with buyers being able to finance homes you are selling? Or bringing in their own homes?
If I am missing something here please let me know.


Presently the market at least in the MW for used homes is expensive and the lenders find park owners much more reliable to pay the notes timely (07 and 08 left a bad memories to lenders). We are having good results with paying people (say $750-$1,000) to bring in homes. We then do not paid for decks, skirting, moving fees, or using lots of our equity to fill spaces and receive rents instantly instead of spending time looking for qualified buyers. After 12 years of use I doubt the homes would sell for 41,600–you do not want to tie up your money if there is another possible solution!!


You are paying people up to 1k to move in their own homes?
If you don’t mind, what kind of good results are having with this strategy?

Do you think you would be able to fill empty lots as quickly as buying and moving in your own homes?
Clearly, this would be much easier and more economical then having to buy the homes myself. Im just concerned that its a slow process. I am looking to fill 40 lots over a year or two.

John it is probably unrealistic to believe you can find 40 buyers in 2 year. If it were likely then there would be no empty lots in parks.

Our home owners seem to have no problem finding buyers for their homes and we have had no problems in selling 5 homes we have had. On average we generally have about 3 turn over per year. Our buyers are primarily low to middle in the middle income range. Banks are financing as personal loans at about 10%. The nice thing about buyers getting their own financing is that the banks do the credit checks and will obviously not loan to anyone with poor credit. Our community is not geared to affordable housing clients. We do not accept any applicants on welfare.
I know most community owners will say none of their residents have good credit but our business plan does not allow any applicant into the community that has bad credit. Bad credit means financially irresponsible and high risk. The only exception is those that have a single life altering incident such as divorce which destroys their credit. These individuals, assuming they can purchase the home. we do considered for residency


Thanks for the all the information. Its good to know that this is working for you. It is something I am going to look more into.
Perhaps 40 lots in 2 years may be a little too ambitious. However, I would be doing well if I can fill 12 lots in a year. A CL ad we placed got over 10 inquiries a day. I have read some posts on this forum, from experienced park operators, that they typically fill a home for every 10 inquiries. Obviously, I don’t plan on filling a home every day, but with that level of demand I hope I could fill at least 1 or 2 lots a month.

If I can work with buyers in financing their own homes directly though the bank then that would be by far be the easiest solution in filling lots, along with the move in incentives that Carl had mentioned earlier.

John, you are addressing one of the major problems park owner face–what is the best way to fill empty spaces that are really lowering the income and value of your property. With that being said having some empty sites that you can fill quickly changes your net and cash on cash return. There is no one magic formula that will work in the divisive operations we operate across the country therefore experiment trying the cash pay out including giving money to present resident if they have friends willing to come into the park, paying new resident as they come in–those programs can promote lots of GOOD PR and make a more unified environment. Mr. Buffet’s program is perfect for him but has some negatives for park owners but at least as Mr. Reynolds indicated it is a good package deal to fill a lot of empty spaces. As per Greg’s comment he is correct 40 spaces is a lot to fill in 2 years and maybe need 4 years to be realistic.

divisive needs to diverse in the above blog, thanks

Thanks Carl. Looks like I will have to try out all the strategies and see what works best. :sunglasses: