I am considering purchasing a 42 pad park that is 85% occupied in the North East. The lot rent is $386 which includes water. The current owner wants to keep ownership of the 16 park owned homes. The rest of the homes are owned by the tenants. He would collect the rent and pay me the lot rent. Is this a good idea to have the former owner/ one person owning 16 homes in a park this size??? I would appreciate your advice!!!
This would make me a little nervous. Obviously this isn’t much of an issue as long as the homes stay in the park (and he keeps reasonable tenants in them). It would be very expensive for him to move a substantial number of the homes out, but if he did you’d be scrambling to fill lots as I can’t imagine this would cash flow well in that scenario. I would consider this deal if 1. the sale price and/or terms were smoking hot and 2. I was well capitalized and could fill lots with used homes (this is a lot of spaces for the new homes CASH program).
Better yet, is there a contract/lease you can have him sign to keep the homes in the park for X number of years?
I would be willing to take the risk since POHs are a liability. Make sure you have individual lease agreements for each lot and strictly inforce your right to screen every applicant. Set high screening standards for the and stick to them.
All lot and tenant violations should be immediately addressed with the primary tenant…the home owner, and do not hesitate to issue eviction notices. The upkeep and tenant quality of the 16 homes will drive the e quality of your entire community so for that aspect at least having one owner could be a major plus if you have the proper landlord skills. If you do not it could turn out very badly.
It will all boil down to your management skills.
I would say YES, You have the spaces full, he has to maintain the homes and do any evictions. I brought several rental Mobiles into my Park and ended up selling them all, the little extra rent was not worth the hassle of replacing carpet, etc… every time someone moved out!