Mobile home park management is unique. Even though some aspects are similar to managing a group of single-family homes or apartment complexes, 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 things first
The biggest difference between running a mobile home park and 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.) to your tenants.
TIP #1: Flipping a manufactured home is completely different.
When you own a single-family house, “flipping” 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, versus simply renting out the lot.
TIP #2: 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.
For instance, landscaping is critical when operating a mobile home complex. 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.
TIP #3: 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, 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.
Here are some questions you should be asking when running a mobile home park:
- 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.
TIP #4: Use the power of scale.
The best thing about mobile home park management is that your decisions can lead to huge benefits depending on 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 the income from just one park!
Common Issues and Challenges in a Mobile Home Park
Mobile home parks provide affordable housing options for many individuals and families, offering a sense of community and flexibility. However, like any residential area, mobile home parks also face a unique set of challenges and issues. Here are the most common problems encountered in mobile home parks and potential solutions to address them.
Infrastructure and Maintenance
One of the primary challenges in a mobile home park is maintaining the infrastructure and amenities. The roads, sewage systems, water supply, and other utilities must be regularly inspected and updated. Due to budget constraints and the transient nature of some residents, maintaining the park’s infrastructure can become an ongoing challenge. Lack of proper maintenance can lead to safety hazards, reduced property values, and an overall decline in the quality of living for residents.
Solution: The park management and owners should allocate sufficient funds for regular maintenance and upgrades of essential infrastructure. Implementing a comprehensive inspection and maintenance schedule can help identify and address issues proactively, preventing more significant problems down the line.
Management and Dispute Resolution
Effective park management is crucial for maintaining a harmonious living environment. Mobile home parks often have diverse populations with varying needs and expectations. Conflicts may arise between residents or between residents and park management over issues such as rent increases, lease agreements, and rule enforcement. Inadequate dispute resolution mechanisms can exacerbate tensions and lead to prolonged conflicts.
Solution: The mobile home park management should establish clear and transparent policies for conflict resolution. This could include setting up a resident advisory committee where residents can voice their concerns and suggestions. Mediation services can also be employed to address disputes impartially, allowing for a fair and satisfactory resolution.
Compliance with Regulations
Mobile home parks are subject to various local, state, and federal regulations that govern safety, health, and zoning. Staying compliant with these regulations can be a complex task, particularly for park owners or managers unfamiliar with the ever-changing legal landscape. Failure to comply with the rules can result in fines, penalties, and even closure of the park.
Solution: Regularly review and update park policies to ensure compliance with all applicable regulations. Engage with local authorities and seek professional legal advice to stay informed about any changes or new requirements. Education and training for park management and staff on relevant laws can also help ensure ongoing compliance.
Affordable Housing Crisis
Mobile home parks have long been seen as an affordable housing option, but the increasing costs of land, utilities, and maintenance have put pressure on the affordability of living in these communities. Additionally, some mobile home parks face the risk of closure due to land redevelopment, leaving residents displaced and struggling to find alternative housing.
Solution: Collaborate with local governments and housing organizations to explore affordable housing initiatives. Grants and subsidies can be sought to assist low-income residents in meeting their housing needs. Community land trusts can also be established to protect mobile home parks from redevelopment, securing their long-term existence.
Community Cohesion and Social Isolation
Mobile home parks are diverse communities with individuals from different backgrounds and demographics. Social isolation can be a problem, particularly for seniors and newcomers, leading to feelings of loneliness and alienation. Lack of community cohesion can weaken the support networks that help residents during challenging times.
Solution: Organize community events and activities to foster a sense of belonging and social interaction. Encourage residents to participate in neighborhood associations and clubs. Establishing a central gathering place, such as a clubhouse or community center, can serve as a hub for socializing and communal activities.
Mobile home parks play a vital role in providing affordable housing options for many individuals and families. However, they also face a range of challenges that demand proactive solutions. By addressing issues related to infrastructure maintenance, effective management, compliance with regulations, affordable housing, and community cohesion, mobile home parks can continue to offer residents a safe, supportive, and inclusive environment for years to come.
Collaboration between park owners, residents, local authorities, and housing organizations is essential to overcome these challenges and ensure the sustainability of mobile home communities. 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!