How to Buy a Mobile Home Park: A Step-by-Step Guide for Investors
A mobile home park is a real estate investment with an unusual shape. In many parks, residents own their homes and rent the land beneath them, so the owner collects lot rent rather than rent on dwellings. Some parks also own homes that they rent or sell to residents, and many own the water, sewer and electric lines running under the streets. Investors who want to buy a mobile home park need to understand all of these layers, because buyers and lenders will examine each one before a deal can close.
This article is general guidance for buyers of existing, operating mobile home parks and manufactured housing communities. It does not address building a new park, adding lots or financing home purchases for residents. Laws affecting manufactured housing communities vary by state and locality, and buyers should work with qualified attorneys, accountants and other professionals. Nothing here is legal, tax or financial advice.
Step 1: Define What You Are Looking For
Parks differ widely. Some are made up almost entirely of tenant-owned homes; others hold a meaningful number of park-owned homes. Some connect to public water and sewer; others rely on wells, private treatment systems or septic. Some have on-site managers; others are run remotely. Deciding which features you are prepared to manage helps narrow the search and shapes the financing you may be able to obtain.
Step 2: Review the Offering and Early Financials
Request the lot rent roll, several years of operating statements, a trailing twelve-month statement and a list of homes showing which are tenant-owned and which belong to the park. Early questions about utilities, home titles and deferred maintenance can save time later. Our guide to mobile home park valuation explains how buyers and lenders weigh this information.
Step 3: Understand Park-Owned and Tenant-Owned Homes
Lot rent from tenant-owned homes and rent from park-owned homes behave differently, carry different costs and may be viewed differently by lenders. See our article comparing park-owned homes and tenant-owned homes.
Step 4: Make an Offer With Contingencies
A letter of intent and purchase agreement should allow time for due diligence and financing, and should address which homes, vehicles, records and service contracts are included. Have qualified counsel prepare or review the documents, particularly where state law may require notice to residents before a sale.
Step 5: Complete Due Diligence
Due diligence tests the seller’s story against leases, bank deposits, home titles, utility records, permits and inspections. Our mobile home park due diligence checklist covers the full review, and our article on the lot rent roll explains how to verify income.
Step 6: Arrange Financing
Lenders will review the park’s income, the condition of its infrastructure, third-party reports and the buyer’s experience and liquidity. Our guide to mobile home park loan requirements outlines what to prepare, and our page on conventional real estate loans describes one financing option for park properties.
Step 7: Plan Management and the Resident Transition
Decide who will collect rent, enforce community rules, handle utility issues and respond to residents. Plan how residents will be informed about the new owner and where to send payments, and confirm any required notices with counsel.
Step 8: Close and Take Over Operations
At closing, confirm the transfer of deeds, home titles, deposits, records, keys and service accounts. Permits and licenses should not be assumed to transfer automatically; confirm with the issuing authorities and counsel what is required.
Common Mistakes When Buying a Park
- Relying on a rent roll that has not been reconciled to bank deposits
- Overlooking the age and condition of underground water and sewer lines
- Assuming park-owned home income will be treated like lot rent
- Missing unpaid utility charges or delinquent residents carried on the books
- Ignoring state rules on rent changes, resident notices or community rules
- Failing to confirm the park’s zoning status and whether homes can be replaced
US Professional Funding helps investors and owner-operators finance the acquisition of existing, operating mobile home parks. Learn more about our mobile home park acquisition financing.
