Mobile Home Parks 101.ORG
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Learn more about Mobile Home Parks for sale.
When considering mobile home parks for sale it is essential to understand the primary difference between purchasing a community with a high vacancy factor VS. purchasing a community with a low vacancy factor. High vacancies can be found in all types of communities. Low vacancies are a sign of a community in a good market. So, how do you have two communities right next door to each other where one community has 7% vacancy factor and the other has a 22% vacancy factor? In the case of this illustrative example the community 1 has 200 spaces and community 2 has around 300 spaces. Community 1 is 15 years old and community 2 is 30 years old. Both communities have good lot sizes and can hold large single wide units and double wide units. Both communities have city water, community 1 has individual water meters, community 2 has no water meters. On a scale of A to E, A being the best and E being the worst, community 1 is an A- and community 2 is a B- to a C+. So there is not a major difference in the two communities. The same couple of local banks in the area finance homes for individuals who want to buy homes to be placed in one of the parks. So what is the reason for the vacancy factor in community 2? The answer is not crystal clear without knowing how much either community pays out to advertising, how they advertise and how aggressive they are when it comes to programs that get rid of old homes and gives incentives to tenants to upgrade. Community 2 is an older community and actually had homes that were older style homes that the metal trailer look with metal roofs where community 2 has all shingle roofs and lap siding.
Did community 2 do something wrong? Perhaps over the years community 2 did not offer some way out of the old homes and a way into the new homes for its tenants where community 1 is simply to young to experience the problem community 2 faces? When talking with the owners and managers it seems that both communities are aggressive in their advertising and willingness to satisfy a customer and do what ever it takes to get a qualified tenant into the park. In this case community 1 has the upper hand because it is newer and potential tenants seem to be pulled to the newer looking community. Community 1 had recently routed and rubber sealed the asphalt roads. Community 2 seemed to have a some pot holes an looked like it probably lacked the proper road care and patch work that would normally take place in a community that possesses a hide pride of ownership. Community 1 had a pulse on the local market and what the tenants could afford. Community 1 seemed to concentrate more on the brand new affordable singlewide unit. Community 2 seemed to really want to push the doublewides, I noticed no singlewide models, when driving through. What some communities seem to lose site of is the affordability factor, after all, these communities were designed with affordability in mind. The whole idea was to give someone the ability to own their own home and be able to provide that in an affordable way. Community owners easily lose site of the affordability factor. The times always change, the market changes, interest rates go up and down and financing for homes in mobile home communities is strong some years and weak in down times. In the case of community 1 and community 2, lets take a look at the affordability factor.
| Community1 | Community 2 | Nice apartment 3 bedroom 1200 SF | 1200 SF 3 bedroom residential home | |
| Cost for unit | $28,000 | $42,000 | $0 | $80,000 |
| Monthly Cost (financing 90%, 10% interest for mobile home and 7% for residential home) | $243.13 | $364.78 | $900.00 | 558.22 |
| Utilities | $300 | $300 | $0 | $300 |
| Taxes | $20 | $30 | $0 | $125 |
| Lot Rent | $300 | $300 | $0 | 0 |
| Total | $863.13 | $994.78 | $900 | 983.22 |
In this example you have Manufactured Housing monthly expenditures in the same monthly price range as an apartment or a residential home. Realize this is just an example, however at the time this information was entered the example is based on a real market condition and scenario, a sign of the impact that low interest rates has on the manufactured housing inside mobile home parks. The whole idea when looking for mobile home parks for sale is to find something of value to offer a new tenant. The better the value, the better odds you will have filling your community and keeping it full. The other interesting factor to consider is this; Manufactured housing communities are typically not wanted in most towns. The red tape one must go through to obtain zoning for a new development project is overwhelming. The reason this is good for a mobile home park owner is simple, your competition cannot just build 500 units down the road as easy as say, an apartment complex would be able to. As a result of these facts, the conclusion can be that mobile home parks that are full or have strong occupancy history while the industry climate is challenging as a result of low interest rates and financing difficulties should prove to be a viable investment more so than a community that has high vacancy because of the resilience of the strong occupancy shows proof positive to be able to sustain in tough times while the weaker community withers and waits till more favorable times come its way. This is not a generalization to say that all high vacancy factor communities are bad, or to suggest that every park that's full or close to full is a good deal. There are great deals in both types of communities, you just need to understand the numbers, the expense factors, and have a good understanding of where the industry has been, where its at now, and where it is going.
We hope you have a better understanding when it comes to mobile home parks for sale and considering buying a low vacancy park vs. a high vacancy park. Keep in mind it is not always a simple process to fill a community. you should always ask the question "why is the community not full now?" and "how much better of a job can I do than the current owner?" Banks will always lend easier on a community with lesser vacancy rates.
Should you have any questions about this site or any site within the Gorial Realty Family of web sites feel free to call upon us for answers.
-Samer N. Gorial, and John P. Gorial of Gorial Realty LLC (866) 66 PARKS