So you’re driving down the road and you see this mobile home park. Is it a potential acquisition target or not? What are the clues that would make you think this is a good property to pursue? Let’s review.
Note that the entry sign is a sheet of plywood with the words “Trailers & RVs” – nobody has used the “trailer” term on a sign since the 1970s. That’s about right, as the paint is falling off of it. And you can also see three poles to the left of the sign, inside the property, that are all missing the signs that used to be attached to them (probably a speed limit, “children at play” and “towing enforced”). Why would you either not put the signs back up on them, or remove the poles? That’s a dead giveaway that the owner is no longer that interested in the property, and suggests there may be other operational issues that could be easily resolved.
Chain link fence in poor condition
Back in the 1950s and 1960s, there was widespread use of chain link fence in mobile home parks – and that includes at the entry to the park. It was O.K. then, but is very unsightly today, as the top rail typically gets bent or missing, and then the rust sets in. This is another clue that the park owner is not actively engaged in park operations, as a modern owner would have replaced this unsightly fencing with white vinyl PVC products.
The first thing you see in this photo is the grass growing out in the street. That’s a clear sign that the mowing in the property is sub-par. A good owner would have the grass mowed and edged, and anything growing into the street would be removed. Typically, mowing is a good indicator of the strength of management in the property. We have never seen a park with tight management and poor mowing, or vice-versa.
Note that the bushes and trees and shaggy and unkempt. This is another sign of management problems and owner lack of interest. This property does not have much to work with aesthetically, and a good owner would make sure that the entry landscaping – if nothing else – was the best in the park. Not here.
Now for some good things that would make you more interested in this unkempt property. Number one is the fact that this property features an office/clubhouse at the front. Why that’s significant is two-fold 1) it suggests that this property is large enough to warrant this type of amenity and 2) it gives the idea that this park might have been built during one of the HUD park development programs in the 1960s, which created well-planned and over-built communities. There is no occasion when having a clubhouse at the front is a bad sign.
Concrete streets, curbs and gutters
One of the best indicators of the macro infrastructure in a mobile home park is the roads. Dirt roads typically accompany a well and septic, and are highly unattractive to lenders. Asphalt roads are the industry standard. But a notch above that are concrete roads, such as this property offers. Any park with concrete streets typically also has above-average infrastructure – and concrete streets are a huge turn-on for lenders and future buyers.
Frontage on a major road
Over the last two decades we have found that mobile home parks that are located on busy thoroughfares are some of the most successful. Of course, this makes common sense, as a park on a busy street gets lots of walk-in traffic and is easy for customers to locate. Additionally, many mobile home park residents like to be able to walk to basic services, such as the grocery store.
You can’t tell from the photo, but you would if you had been there. This park is in a good location near retail and an airport. It’s not a fancy location – it is probably not a great school district – but it definitely has the market dynamics of a 100,000+ metro population, greater than $100,000 median home price, and greater than $1,000 per month average apartment rent. It’s also near a Walmart, just down the street.
What all this means
The best type of opportunity in buying mobile home parks – the #1 positioning – is when you have a property that has good “bones” about it, but is horribly mismanaged and unappreciated by the current owner and/or management. This allows you to buy a high-quality asset for a lower price, and then rapidly enhance the value by improving the appearance, raising rents, filing vacant homes and lots, and cutting unnecessary operating costs.
This park could well be a great acquisition opportunity. It has all the correct pieces. The next step would be to find the property owner through the tax assessor records and make contact. Where does it go from there? That’s up to you.