What a great business it is to own a mobile home park.
You own land that others have agreed to rent from you for years or decades at a time. In addition you can hold multiple mobile home units on your land and charge each owner monthly for this parking space. There are of course amenities, utilities, rules, and statutes the park must obey and may have in place however this business model makes sense (and dollars… bad joke) to most of us reading this article.
In this article I would like to quickly highlight an important issue when it comes to investing in mobile homes inside preexisting parks, “Who pays unpaid lot rent when you purchase a used mobile home in a park?”
This is a popularly confusing question that we will describe using a recent case study.
A Mobile Home Example
I recently purchased a used mobile home in a preexisting mobile home community.
In the coming weeks I will have a full case study regarding this property for everyone’s education. The mobile home seller was originally asking $11,000. When I approached the seller he was asking $7,000. After negotiating some time and offering 3 purchase offers we agreed on a fair price of $2,100 plus my company agreeing to pay their past due lot fees and late fees. The terms for the sale were all cash.
The seller accepted my offer because he and his family were motivated to leave. One reason for the quick move was due to the seller wishing to move to an area closer to work. The other more pressing reason was due to the seller being 2 months behind in lot rent and not planning to make the payments before the park intended to evict him …read more