Brand new... - Posted by Andy

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by Dr B. (OH) on December 07, 2007 at 19:04:26:

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Brand new… - Posted by Andy

Posted by Andy on December 04, 2007 at 12:47:35:

I’ve just started looking into this type of investing and this is the first question that popped into my head. Do most MH parks allow you to rent your MH? Also who pays the lot fee? If you want to post some general pitfalls of this type of investing that would be appreciated. Thanks.

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Re: Brand new… - Posted by Michael(KCMO)

Posted by Michael(KCMO) on December 07, 2007 at 06:37:32:

Andy,

Several park owners here on the board do rent out the mobile homes they own in their own park. They have done well with that. I don’t have any direct experience in park ownership so I’ll let them explain that. I don’t think that’s what you were asking, though. If I understand the intent of your post you were asking more about buying and renting mobile homes in someone else’s park, where you don’t control the dirt.

I’ve done this (still have a couple rentals left that will be sold off as the tenants eventually move out). I don’t recommend it. I didn’t have a terrible experience with it but there are still two reasons I wouldn’t recommend it:

  1. I can make the same money just selling the home on payments. For example, market rent for a decent 2 bedroom is about $600. Lot rent is $300. So I receive $600 in rent, pay out $300 in lot rent and put $300 in my pocket. Now I have to take into account maintenance, taxes, etc, etc that I wouldn’t be responsible for if I had just sold the home. If I SELL the home I can receive the same $300 net in my pocket. Buyer pays $300 to park for lot rent; $300 to me for home payment. Except now I’m NOT responsible for maintenance, taxes, etc so I actually net a little more.
    The disadvantage to selling is that the cashflow will eventually end when they pay the home off.
    The disadvantage of renting are the extra expenses, bookkeeping and minor hassles of being a landlord when I’m not adequately compensated for it in higher profit.

  2. I don’t control the dirt. Example: Market rent is $600, I can’t get any more than that. Park owner raises lot rent $20. My monthly cashflow just went DOWN $20. If I had SOLD the same home instead of renting it then the BUYER would have to come up with that extra $20. My cashflow would’ve stayed the same. (plus all the other expenses mentioned previously)

My concentration is now focused on doing more lonnie deals more efficiently and more profitably.

Regards,
Michael(KCMO)

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Re: Brand new… - Posted by Babacar

Posted by Babacar on December 05, 2007 at 11:29:23:

Hey Andy,
Welcome to this community.It is a great tool.
1st question: some mhp do, most don’t.
2nd question: Your buyer pays the lot rent unless you are renting the mh.
3rd question (the one you did not ask): most of us started by buying an oustanding book from this site called Deals on Wheels by Lonnie Scruggs. For me it was the best $30 I have ever spent.Give it a try, you will be glad you did. It has all the answers and then some.
Good Luck
Babacar 404-379-7188