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How to Find Profitable Mobile Home Parks

Mobile home parks are tremendous investments, but how do you find the motivated sellers that make profitable deals possible?

mobile home park investment

Mobile home parks are tremendous investments, but how do you find the motivated sellers that make profitable deals possible?

If you are new to the industry, you’ll want to look close to home. The closer to home, the better. I’d look within 50 miles of home to expand the number of opportunities, but hope you find a park much closer.

The best deals–with the most motivated sellers will be parks that have run down and are not operating optimally.

This will require you to physically work in the park to get the improvements started. You don’t want to drive 100 miles round trip every time you get a call, but it may be the price you pay to get into the investment.

Once you install new park rules, move along bad tenants and non-payers, and fill the vacancies, you can find an onsite manager that will take over 90% of your duties and eliminate those on-demand drives to the park. This will give you the time you need to find the next park.

To find deals within a 50-mile radius to home, try the following resources:

Classified Ads in Sunday Newspapers

This isn’t the best source, but it’s the obvious source. You’ll want to look under “Commercial Property,” “Mobile Homes For Sale” and “Mobile Homes For Rent” headings. The mobile home headings will be advertising individual homes, which gives you insight into the condition of the parks where those homes are located. Lots of vacancies or lots of homes for sale can indicate a burned-out landlord who may be willing to sell but hasn’t yet listed the property.

Local Realtors

Visit with the most visible commercial property Realtors in your area and tell them what you are looking for. They often know of properties that aren’t yet listed or once were listed but are now inactive. They will also know of any parks actively on the market. If nothing is currently available, ask them to call you as soon as they hear of something.

Local MLS

Local Multiple Listing Services are often online for public access. Ask your Realtor for the web addresses, so you can do your own searches each week.

Local Real Estate Guides

Depending on city size, these are printed weekly, monthly, quarterly or annually. Get the latest edition from a Realtor or convenience store. Ask your Realtor to mail you the new one every time it is published.

Send Letters to Local Park Owners

Many properties change hands without ever being listed for sale. Send a letter to local park owners introducing yourself and ask them to contact you if they ever want to sell. Most owners will be flattered and at the least, save the letter for the future.

Speak to Local Bank Managers

Tell them you are looking to buy a mobile home park and would appreciate them telling you of any they know are available. Bankers know their customers and will know who is behind on payments, who has a park for sale, or who might want to retire. Use the meeting to build a relationship and discuss the bank’s commercial loan terms and qualifications. Then when a park does become available, you’ll know which banks are the best candidates for funding.

When Your Local Park Is Running Smoothly, You Can Look Outside Your Area

Once you are the established owner of a local park, have a good manager, and have all your forms and systems in place, then you can start looking for parks outside your area. You can run parks from afar with a good manager. Even worst-case scenarios are manageable once you have systems in place.

I recently had to change managers from 800 miles away and while it was a hassle, I was able to find a great person (existing tenant in that park) using just the telephone, fax, and email to get her trained.

It helped that we already knew her as a tenant. It REALLY helped that we had all the training materials and forms in computer files already written. We also know people outside the park who can drive through and give us visual reports of conditions. She’s doing a wonderful job.

To find profitable parks with motivated sellers outside your area try these sources:

Loopnet.com

Loopnet.com is used by serious commercial Realtors, buyers, and sellers nationwide. This site requires you to register (free) to access thousands of commercial properties all over the USA. They withhold some listings for their paid subscribers ($39.95 per month to get everything listed). I have used this service as both a free and paid member.

Try the free service to learn the lay of the land and upgrade when you get more serious. Tip: If a listing is “inactive” click the link under the listing to learn more about the property. This will provide details from when it WAS listed. This is great info to find motivated sellers as it reveals the old price, time on market, and ownership details.

State and City Commercial Property Websites

Just use Google to find these sites. For example, I found MontanaCommercialRealEstate.com by searching for “montana commercial property.” This great, free Montana site links to dozens of commercial property listings you might never find. Do the same for your state or city.

MobileHomeParkStore.com

MobileHomeParkStore.com advertises both individual mobile homes and entire parks for sale. Just click the tab labeled “Mobile Home Parks For Sale.” You can select listings by individual states.

The listings often provide the park’s financial numbers, so you can pencil out parks immediately. The ballpark industry norm for mobile home park price is ten times Net Operating Income. Any park listed for that or less is a potential bargain.

Once you find a motivated seller, meet with them personally. Learn their reason for selling, their ownership problems, and what they need from the transaction. While they try to sell you their property, you are trying to convince them you’ll be an ideal buyer. If they trust and like you, they will be far more flexible with their terms.

Once you understand what they need from the deal, you can construct a fair offer that works for them, works for the bank, and works for you.

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About the Author...

Mike Johnson made the journey from working jobs to freelance writer to entrepreneur to passive income and early retirement. He’s owned mobile home parks since 2003 and “retired” at age 52. He teaches others how to do it at PerpetualSaturday.com.

He's the author of “43 Ways to Earn Cash Today” (for tenants) and “101 Ways to Provide Exceptional Customer Service Today” (for landlords and managers). You can also find Mike at MikeLeeJohnson.com

Comments

  1. Theresa Grethe says:

    Hello I have read this article and I truly enjoyed it . I am curious if you can help me to purchase my very first mobile home park . I am very motivated .
    Sincerely
    Theresa Grethe

    • Mike Johnson says:

      Hi Theresa,

      I can certainly help you get through the learning curve by directing you to resources and answering big questions when they arise. I’ve bought three parks so I’ve faced lots of scenarios. But there is always something new to learn and every deal is a bit different. A person I mentored just bought his first park a few weeks ago.

      In general, you are looking to provide what the Seller needs within the parameters of what you need. If the owner won’t finance, you’ll also need to provide what the banker needs. Massaging all three parties to a solution that’s agreeable to all creates a good deal for everyone.

      I responded to an email from you a few days ago. I hope you received it. If not, take a look in your filtered mail in case it was filtered there. Or just email me again.

      Good luck!
      MJ

  2. Theresa Grethe says:

    Very informative . I am now motivated to be a Real Estate Investor .

  3. what is the best way to find these flexible sellers? this is exactly what i want to do.

  4. Mike Johnson says:

    Hi Ken,
    You follow the tips above to first find an appropriate park and then you meet the seller during the showing to learn about his park and why he’s selling. Most sellers will say they don’t offer any financing. But once you build rapport and they like you, they become more flexible.

    They also become more flexible once they realize you can gain bank financing for up to 70% of the appraised value of the park. This is achieved if you do a good job of presenting the park and it’s numbers to the banker. Banks direct 90% of their qualification process on the property, not you. This is because the property comes with a proven, secure income stream. That”s what they’re loaning against. They just want to verify that you’re personally solid enough to not screw it up.

    So once the seller realizes selling to you will get them at least 70% of their money at closing, they often loosen up a bit to help you fill the remaining 30% gap to close the deal.

    Penciling out deals and meeting with sellers is the best way to build your knowledge and sharpen your skills to convince a seller to help you buy his park.

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