I’ve been studying the mobile home park industry over the last few years and I’ve recently decided to move forward with purchasing some of my own parks and ‘test’ some of the data that I’ve found to be very, very exciting about this real estate investment asset class. In addition to the upside potential of equity and cash-flow, there are some exciting opportunities as well to make an impact in other areas as well with some real intrinsic value and ways to make a bigger impact than just your bottom line.
Here’s an article I would like to share that from Frank Rolfe of Mobile Home University. I attended their training earliest this year and have the utmost respect for Frank and the training they provide at Mobile Home University.
But there are winners and losers
When you bring old mobile home parks back to life there are many different issues that occur as a result, some of which are beneficial and others more challenging. Here is the list of who the affected parties are and how they are impacted.
Residents. The biggest winners when you bring old mobile home parks to life are the residents. They receive a much greater quality of life, higher re-sale value of their homes, and more pride-of-ownership.
Neighbors. As the mobile home park improves in aesthetics professional operation, this enhances the quality of life or neighboring property owners who see their real estate values climb and their quality of life improve.
Greater community. Even though they don’t live right next door, all who live in the community will benefit from a more positive development in their borders, as well as the greater interest of new development in the city that may have been scared away by the former blight.
Property owner. Another key beneficiary of bringing old mobile home parks back to life is the property owner. They benefit from more professional management and structure, utilities and roads in better operating condition, and higher values.
Residents who were living marginally and need social program housing or help. In many mobile home parks that are subject to needing full restoration there are typically some residents – but not always – that are unable to live in the absence of governmental assistance. This has often been true for years, but the mom & pop owners have allowed them to remain rent-free and without abiding by the general rules of the property. Upon renovations and installation of professional management, these residents can no longer function in an environment where rent is due monthly and minimum rules compliance of home and yard condition is enforced. This is where the government needs to step in and find these residents housing that meets their particular needs through programs such as Section 8 housing assistance – however, these programs are effectively broke and can no longer take in new applicants. But this is a governmental responsibility, not that of the park owner.
Criminal enterprises. Many mom & pop owners have no formal screening process of residents, as well as no rules enforcement or even on-site management in some cases. This allows mobile home parks to often harbor undesirable tenants with frequently criminal associations. Upon bringing these parks back to life, these criminal enterprises are displaced through a lack of tolerance of criminal behavior.
Those who can’t live within the rules as a lifestyle choice. There is a whole additional category of those who refuse to live within rules as separate from those who can’t due to financial problems or sometimes even mental illness. These residents actually take pleasure in bothering their neighbors with loud music at night, wild parties, and general disregard with the basic tenets of being a good neighbor. Those who refuse to follow the rule of the park are also displaced as part of the turn-around initiative.
Those who wanted the mobile home park to be torn down and redeveloped. It is well-known that there is a fair amount of hostility against “trailer parks” by the average American, and when you bring a mobile home park back to life it ruins the possibility of total destruction and new greenfield development. We have purchased parks that had other bidders that included neighboring business with the purpose of total destruction of the property.