Lot Rent Roll, Leases and Collections Review in a Mobile Home Park Purchase
The lot rent roll is the seller’s summary of who lives in the park, what each resident pays and what each resident owes. It drives the income a buyer is paying for and the loan a lender may be willing to make. But a rent roll is a report, not proof. Testing the lot rent roll against leases, utility charges, collection history and bank deposits is one of the more important steps in buying an existing park.
This article is general information for buyers of existing, operating mobile home parks. Lease terms, rent changes, fees, deposits and collection practices are governed by state and local law that varies widely, and buyers should review them with qualified counsel. Nothing here is legal advice.
What a Lot Rent Roll Should Show
- Each lot, with the resident’s name and whether the home is tenant-owned or park-owned
- Lot rent and any separate home rent
- Utility charges billed to the resident, if any
- Other recurring charges, such as pet, storage or vehicle fees, where allowed
- Lease start date, lease term and the date of the last rent change
- Security deposits held and current balances owed
- Lots that are empty, homes that are vacant and homes believed abandoned
Reconcile to Bank Deposits
The rent roll should tie to what was actually collected. Buyers frequently compare monthly rent roll totals with deposits in the bank statements and with the operating statements. Gaps may reflect delinquencies, concessions, cash payments that were not deposited or charges that were billed but never collected. Our guide to mobile home park valuation explains why verified collections matter more than billed rent.
Review the Leases and Community Rules
Buyers should read a sample of leases, or all of them where practical, and the park’s community rules. Questions to ask include whether leases match the rent roll, whether rent changes were made with any required notice, whether fees charged are permitted and whether rules have been applied consistently. Our article on manufactured housing landlord-tenant laws explains why these issues should go to counsel.
Look Closely at Utility Charges
Where a park bills water, sewer, trash or electric back to residents, the method and amounts should be documented. Whether a park may bill back utilities, and how, depends on state and local rules and the leases. Billed utility charges that are not collected, or that may not be permitted, can overstate income.
Delinquencies and Collections
- An aging of balances owed by each resident
- Payment history over at least the trailing twelve months
- Payment plans, write-offs and accounts sent to collection
- Pending or recent eviction or abandonment proceedings
A park that collects reliably may support greater confidence than one whose rent roll includes long-standing balances. How collections are handled day to day is also a management question; see our article on mobile home park management.
Verify Homes and Lots on the Ground
Walking the park lot by lot and comparing what you see with the rent roll can reveal homes listed as occupied that appear empty, lots listed as empty that hold a home, or homes in poor condition. Our mobile home park due diligence checklist covers this broader review.
Estoppels and Resident Confirmations
Some buyers or lenders request written confirmations from residents about rent, deposits and lease terms. Whether that is practical, and how it should be handled, is a question for the buyer, lender and counsel.
Sellers Benefit From Clean Records Too
Owners preparing for a sale can reduce delays by reconciling the rent roll to deposits and resolving disputed balances before marketing the park. See our article on how to sell a mobile home park.
US Professional Funding helps buyers finance the acquisition of existing, operating mobile home parks based on verified income. Learn more about our mobile home park acquisition financing.
