To sell or to keep POH?

I own a park with a few park owned homes.
A tenant recently moved out of one of the units.

The unit currently rents for $525 but with a few thousand dollars worth of renovations, I can get $725 per month with a new tenant.

My lot rent is $350 per month.

I have a prospective buyer for the unit at $7000. It’s an 80’s Trailer’s in very solid and good condition. It’s brought steady income for many years with little headache.

Is the $375 difference between lot rent and tenant rent enough to continue to rent or should I take the 7k for the trailer and move on? I realize that the “business model” is to sell the POH but I can’t help but question myself especially with the extra $375 per month!

I’d look at your situation another way. You can leave the trailer as it sits and not spend a ton of time coordinating a rehab, get $7,000 to unload it, and only forego $175 compared to today’s rental rate. Then you have a tenant who is invested in keeping their home nice and you can put those proceeds to work on infill or other capital improvements.

With $350 lot rent I would want ~$900 total rent, and if the market doesn’t support that even more reason to sell them. $375 really isn’t a good POH rent rate. For example, if you have to replace the central HVAC you basically lost your whole year on that unit. You see some of these POH in Oklahoma or Arkansas in the sticks that rent for $500 - I have no idea how they make any money at all.

And your time is valuable, don’t discount it.

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The extra $375 you see monthly is never $375. Based on present and future expenses your profit will likely be closer to $0. There is no such thing as a rental property that returns a 100% profit. There are always taxes, upkeep/repairs, tenant turn over, evictions etc. that you are ignoring. Having little headaches in the past is no guarantee of the future and based on the majority of landlords experience will definatly not last. Take the 7K and train the new owners to be ideal tenants before the big expenses begin to roll in.

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I own 9 parks and I wrestled with this questions for years. I would think along your lines, trying to net the most amount of money out of a park. My general rule when I purchase a park is to keep the park owned homes for as long as they keep inherited tenants and turn a profit. The BEST case scenario has been to profit about $2,000 a year on one park owned home (after paying myself lot rent). WORST case, I end up losing money after paying myself lot rent and keeping up with maintenance. Even with that $2,000 profit, that just happened to be a good year with hardly any maintenance request or turn over. My opinion, sell the trailer for $7,000 and collect the easy lot rent!

I think there is a profitable scenario for owning park owned homes, but only if you live near or in the park and enjoy being hands on with management and maintenance and you don’t wish to scale. Otherwise, park owned homes just take away time and energy you could be using to acquire more parks.

The primary reason many investors believe POHs make money is because they do not calculate expenses based on the life of a home. They may make money last year, this year and next year but when the property does eventually need major repairs it will eat up all past profits. This, along with not considering devaluation of the property, is how POH investors are able to rationalise profits.
The only way to profit long term with POHs is to own homes of next to know value and do only the bare essentials in repairs. This may work in a “trailer park” but would not be appropriate for a MHC. This however begs the question… What do you do when the home is no longer habitable due to minimal maintenance. Replace it eats up all past profits, demolish it leaves you with out of pocket expenses eating past profits and no future lot rent.
POHs profit if you are lucky and intend to sell the park within 5 years but otherwise profitable in reality is only short sighted accounting.