Passive Mobile Home Park Investing

Top Risks: Buying Mobile Home Parks with Small Lots and Older Mobile Homes

8 snips
Oct 29, 2024
A deep dive into the hidden risks of parks with small lot sizes and older homes. Short, narrow units that are hard to reoccupy or resell create sourcing and resale headaches. Zoning, replacement age rules, and tight setbacks raise legal and safety challenges. Expect discussion of life expectancy and why larger cash reserves or alternate opportunities may be preferable.
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ADVICE

Price Older Small-Home Parks Higher

  • Do demand a higher cap rate for parks with predominantly older, smaller homes.
  • Require larger reserves for potential demolitions or costly renovations when buying these parks.
INSIGHT

Small Homes Are Harder To Replace

  • Small, 12-foot-wide and park-model homes are much harder to reoccupy and sell in Midwestern markets.
  • New factory homes are wider (14–16 ft) so replacing small homes often requires utility and pedestal upgrades.
ANECDOTE

Park Models Flopped In Illinois

  • Andrew Keel described bringing park models into an Illinois park and struggling to sell them.
  • He said such tiny homes need a very specific tenant avatar and sell far slower than 2–3 bedroom units.
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