I’m totally on board with the idea of having no Park Owned Homes. My question is, when I’m looking at parks to buy that have a majority of POH’s, why not just sell them all off at $1.00? It seems easy enough. I know I asked Frank about it and he agreed. I’m just wondering if there are any potential pitfalls I’m missing here?
I am not an expert, but I own a park and have some experience. The problem I see is that you’re effectively giving the home to the occupant. If that tenant is a responsible person who is prepared to be a responsible homeowner, that’s perfect. If not, if the person has a renter’s mentality, has never owned a home before, doesn’t know how to take care of it, doesn’t have the money to take care of it, doesn’t WANT to take care of it…you can be in trouble. You’re not maintaining the home any more because you don’t own it; the tenant’s not taking care of it. It goes downhill, leaks develop that don’t get fixed, windows get broken that don’t get repaired, and on and on. The tenant stays until he can’t stand it any more, and walks away. You now have a mobile which needs to be either junked, which leaves an empty space unless you bring a new one in, or rehabbed, which can cost $10,000 or more (that’s what I spent rehabbing one in just this situation). It seems obvious to us to maintain the home we’re living in, but it’s not obvious to a lot of folks.
So, selling for a buck ain’t necessarily the wonderful solution it appears at first glance. Probably the better way would be to evict the current renter, ensure the home is fixed up, then advertise and sell it for near fair market value. You have a good chance to evaluate the buyer and the buyer has to put some money down so they have skin in the game.
Any homes you sell for $1.00 also need to come along with a new lot rent agreement for 5 years. You don’t want them getting your home and then moving it out of the Park the next day.
This model should work well for existing tenants with a long term tenure established. You may run into some tenants that don’t want the responsibility of maintaining the home and the exterior appearance, even though they will be getting rid of the home rent component of their monthly payment. You will need to decide whether you want to keep this tenant or non-renew their lease. If you non-renew then you will probably have to fix the home up to make it marketable for 5-10K and sell it, or alternatively work a handyman special arrangement.
If you’re really diligent about ensuring that these tenants keep the outside nice and send them their demand letters quickly when something is off you will either keep the home nice or end up evicting them before it gets out of control…
I would not sell a home to $1.00 for anyone you have not vetted for at least 12 months.
Good points, thanks guys!
In business it is referred to as “skin in the game”. 99% of the new owners will turn out exactly as
Guaranteed they will use it up and walk away. That mentality is why they are mobile home renters in the first place.
I agree with all of the above 100%. Go ahead and advertise a home for $1. What kind of person would that draw?
I demand a fairly high down payment, usuall around $2k but I’ll go as low as $1,500 in some cases. I’m also demanding a payment that pays the home off in no more that 3 years.
Now, after year 2 I’ll likely gift most of these to the residents I want to keep. By then I’ll know who deserves it and who doesn’t.
I’d rather demand a high down payment so they have some serious skin in the game up front.
I’d prefer to do Greg’s method, but most of my homes are about 1975 so I’m assuming the banks won’t lend on them.