On-Site and Third-Party Mobile Home Park Management
A mobile home park does not run itself. Someone has to collect lot rent, enforce community rules, keep the water flowing, respond when a sewer line backs up, deal with abandoned homes and answer residents’ questions. In smaller parks, the owner may have handled much of this personally. When a park changes hands, the buyer needs a clear plan for mobile home park management, and the lender will want to see it.
This article is general information for buyers and owners of existing, operating mobile home parks. Employment, licensing and landlord-tenant rules vary by state, and some states regulate who may manage residential property. Buyers should consult qualified attorneys and accountants. Nothing here is legal or tax advice.
What Park Management Involves
- Collecting lot rent and any home rent or utility charges
- Following up on delinquencies within applicable legal procedures
- Enforcing community rules consistently
- Coordinating repairs to roads, water, sewer and electric systems
- Managing park-owned homes, including repairs and turnover
- Handling resident communications and required notices
- Keeping records that support financial reporting
On-Site Managers
Many parks have an on-site manager, who may be an employee, a resident who receives reduced rent for part-time duties or a contractor. Buyers should understand the arrangement, how the manager is paid, what records they keep and whether they plan to stay. How on-site workers are classified and compensated raises employment and tax questions that should be reviewed with qualified professionals.
Third-Party Management Firms
Some owners hire a third-party firm to manage the park. When evaluating a manager, buyers may consider experience with manufactured housing communities specifically, familiarity with state rules, reporting quality, how rent and deposits are handled and the terms of the management agreement, including fees, termination rights and authority to spend money.
Self-Management
Owners who manage their own parks should be realistic about the time involved and about the expertise required for private utility systems and resident relations. Owners managing remotely may still need dependable local help.
Why Lenders Care
Lenders frequently review the borrower’s experience and the management plan, especially for first-time park owners and parks with many park-owned homes or private utilities. An experienced manager may strengthen an application. Lenders may also review the management agreement and ask that management fees be subordinate to the loan. Our article on park-owned homes explains why home ownership mix affects the management burden.
Management and the Numbers
Seller statements may not include a management fee or full payroll if the owner did the work personally. Buyers and lenders frequently add a realistic management expense when underwriting. Collections performance also reflects management; see our article on the lot rent roll.
Staying Within the Rules
Managers must follow state and local rules on rent changes, fees, notices and evictions. See our article on manufactured housing landlord-tenant laws.
Working Capital for Operations
Uneven expenses such as utility repairs, property tax installments and insurance premiums can strain cash flow even in a stable park. Our page on mobile home park working capital and lines of credit describes options for existing owners.
For Sellers
A park that can run without the owner may be more attractive to buyers. Documenting procedures and building a dependable team can help; 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 and can help plan financing around a realistic management budget. Learn more about our mobile home park acquisition financing.
