Buying/Selling a manufactured home park: Selling a manufactured home park.
If you’re new to the manufactured home park market, or new to real estate in general, this article will help you to better understand the ins and outs of the manufactured home community process.
Industry Verbiage: Over the years, as with any industry the vernacular for manufactured home parks. The general public associates this to “trailer parks”, “trailers courts”, “mobile home courts” etc. In recent years those in the industry have changed their verbiage to reflect the updated quality of the homes and their place in society as a safe, affordable, and cared for community. People within the industry refer now to “trailer parks” as Manufactured Housing Communities, which is where our company draws its name. https://www.midwestmhcbrokers.com/
Understanding the Basics: Manufactured housing communities operate on a simple model, which is why many passive investors choose to buy in the space. More often than not, the owner of the community owns the land and the infrastructure main lines throughout the property and rents space “the lot” to a tenant that owns their own manufactured home. Tenants are usually responsible for the infrastructure that runs from their home, to the utility main lines owned by the community owner.
Utilities: Many “trailer parks” in the past paid for most if not all of their tenants utilities, and offered an all encompassing lot rent charge in order to make a profit. Over the years due to increased utility costs, and general overuse by some tenants within the communities, owners began to submeter and direct bill, or bill back utilities. This is still a common practice when new owners take over mobile home communities in order to lower operating costs and thus raise net operating income.
Starting your search: If you’re a buyer looking to get started in the manufactured home park industry. Start analyzing deals and familiarizing yourself with the industry verbiage. A few great resources for finding parks for sale are Crexi, Mobile Home Park Store, and Industry Brokers. Brokers are also a great resource to answer questions and help connect you with other industry professionals such as insurance agents and Manufactured Home Community Lenders.
Next Time: On the next post, we’ll dive into a few of the more detailed things to understand such as Park Owned Homes, Tenant Owned Home, and Rent to own Contracts. We’ll also go over public versus private utilities, and the pros and cons of small, medium, and large sized mobile home communities.
