Mobile home park management is unique. Even though some aspects are similar to managing a group of single family homes or apartment complex, investors new to this niche will be surprised by a few things.
The good news is by the time you’re done reading this article, you’ll be in less of a surprise regarding what to expect and do to keep the park running well.
First Thing’s First
The biggest different between running a mobile home park vs. other types of properties is this- you may not own the homes themselves. Instead, in these cases you’re just renting out the land and providing the infrastructure (water, electricity, etc.)
Flipping a Manufactured Home is Completely Different
When you own a single family house, “flipping” it usually means you’re doing an awful lot of work around the house. You may end up sinking tens of thousands of dollars before the home is presentable.
The advantage of a manufactured home is the size. Because it’s much smaller, flipping it usually won’t cost as much as a larger house. And if excessive repairs are needed? You can always dispose of it and bring in another home in better condition. Of course, this implies that you own the unit and are renting it out, vs. simply renting out the lot.
Perception is Reality
A lot of mobile homes get a bad rap. They’re sometimes seen as low-quality places to live. If your mobile home park gets this reputation, it will be tough for you to keep good tenants there!
One way to reduce the chances of this happening is to stay active in the community. Get to know the tenants, and ask for suggestions on how to improve the park.
Landscaping is critical here. If your park is overgrown with weeds, or if there isn’t a single area of grass for kids to play, you’re setting yourself up for failure. Treat the landscaping the same way you’d treat any other property you own, and it will pay dividends in the long run.
Beat the Market
Some mobile home park management teams try to attract tenants by offering the lowest prices around.
Don’t do that.
For one thing, it puts you into a bidding war with neighboring communities. If everyone starts to lower their prices just to compete, eventually it will be difficult for everyone to stay in business. Leave the low-priced model to Walmart.
Instead, see what it would take to justify higher prices than the local market. That’s partially where having a great-looking park comes into play, but there’s more to it than that.
- What kind of tenants live there?
- Is the park clearly being updated, or just left alone?
- What are most of the homes like? Are they all 50 years old and falling apart, or 5 years old and in great shape?
- Do you have social events, like ice cream parties in the summer or a Thanksgiving feast in November?
- Is there a Neighborhood Watch program?
In other words- do what the competition won’t.
Use the Power of Scale
The best thing about mobile home park management is that your decisions can lead to huge benefits due to how many homes are on the property.
For example, let’s say your park has 50 homes. If you raise the rents by just $10 a month, your total increase in income is $500 a month, or $6,000 a year. Meanwhile, a landlord with a single family home with the same price increase only gets another $120 a year!
This applies to everything, from the overall net worth of the park to its reputation. If you manage it actively instead of just trying to “rake in passive income,” you may be able to retire and live well off of the income from just one park!
Your mobile home park management team will have its hands full! It’s never a dull moment in this business between the constant coming and going of tenants, advertising your park, maintenance issues, staying on top of finances, etc.
But those who have successfully owned and managed these properties will tell you that it’s worth it, and this industry is a cash cow for those willing to take on the unique challenges it brings. Good luck!