Let’s say you’re always on the lookout to put your money to work for you. Maybe keeping an eye out for opportunities comes naturally to you, and recently, you’ve been thinking about finding and buying distressed mobile home parks for sale.
Whether you’re a current mobile home park owner or not, you’re thinking this may be a good financial investment for you. You do want to head into it with both eyes open though. So you’re wondering whether it’s a good idea and how to go about it.
Defining distressed mobile home parks for sale
When you hear the word “distressed,” what comes to mind? It’s quite possible that your first thought has nothing to do with mobile home parks. Perhaps you get a picture in your mind’s eye of someone upset or crying. Obviously, mobile homes can’t cry. (Though perhaps with some imagination we could say that old homes with stains trailing from the outside of windows or roofs look like they’ve been crying.)
So, as a potential buyer, ask yourself what you mean by “distressed.” Maybe you’re hoping for a “fixer upper” park because you’re a proficient handyman. Thus, you plan not to spend too much paying for someone else to do necessary work or repairs. You aim to tackle it yourself to turn things around.
On the other hand, you may not be looking for a visibly dilapidated park. Instead, you’re thinking of a situation where the current owner wants to get it off their hands quickly (preferably at a great price for you). Take a moment to identify what it is you’re looking for. Perhaps you could even write down a working definition of “distressed mobile home park” as you conceive of it.
Why is it distressed?
Mobile home park owners may sell a park for different reasons. For some, it could simply be time to move on. Others could be letting a park go because they inherited it from parents or a spouse who has passed away. Also, it could be that the park has not been being run in a financially productive way so it’s a drain on the current park owner.
For the sake of the article, let’s divide mobile home parks into two broad categories, financially distressed parks, and aesthetically distressed parks.
Financially distressed parks
Let’s say you’re thinking of a park that looks fine from the outside, but it simply hasn’t been making much of a profit. In fact, it could actually be losing the owner money. It’s not so much the outside appearance of the park you’re hoping to change, but rather the procedures and processes by which it’s run (among other things). Plus, you’d like to get it out of the red when it comes to the numbers. These are some of the things you hope to implement to turn the park around:
- Careful record keeping of money going out and money going in.
- Revamping the policies that apply to residents when it comes to non-payment or late payment. You’re even thinking of including some incentives to increase on-time or early payment.
- Training of mobile home park employees in proper procedures and in general management.
- Determining whether you should have park owned mobile homes.
- Discovering creative ways to cut upkeep and repair expenses.
Aesthetically distressed parks
Let’s move on to our category of aesthetically distressed parks. Now, we’re talking about a park where the distress is visible from the outside. In fact, it might even be visible from a nearby road or highway when driving by. Houses are old, run down, and in need of repair. Perhaps lawns and even driveways are strewn with junk.
Park roadways are potholed or simply have turned into “mud-ways” after a hard rain. Nobody seems to care much about upkeep. All around, it just looks like a place with tremendous potential to disappoint or disgust possible new residents.
Beauty is in the eye of the beholder
While some may think it sounds backward, this less-than-ideal situation is actually very appealing to you. Why? Because you see the potential. When you look at a dilapidated mobile home park, you see more than just the run-down trailers, you see something that could be a thriving community. Plus, it could be an excellent investment for you.
Locating distressed mobile home parks
Whatever your personal aspirations and interests when it comes to buying distressed mobile home parks, you do know that there will be some work involved. How much work will depend on the situation. Maybe the following come to mind as possible tasks:
- Getting and signing necessary paperwork for transfer of ownership
- Repairing the park and/or homes
- Repaving the roads
- Advertising open lots
- Finding and hiring a park manager
However, your input of work may need to start even earlier than the purchasing process. Since distressed mobile home parks for sale don’t simply drop out of a clear blue sky (in most cases), you may need to go looking for them.
Using the internet to find distressed mobile home parks for sale
When it comes to finding these mobile home parks, one possible stop is the internet. From websites that specialize in selling mobile home parks to other general online auction or classifieds websites, check to see what is available. And if you don’t feel like you’re having any success locating the “down and out” parks this way remember these three things:
- Be patient. Just because nothing that’s available today seems to be what you’re looking for, doesn’t mean there won’t be something tomorrow. Persistence may pay off here.
- Dig deep. The first park you see on a website may be a no-go. But you may find something you like in an update email or by scrolling down.
- Add other means to your searching toolbox. You can keep an eye out on the internet but also try other methods.
Word of mouth
Another method you may be able to use is “asking around.” As appropriate, let friends, family, or acquaintances know what you’re in the market for. They may know someone who has a park they’re interested in selling. Or, it may simply cause them to keep their own ears out for possibilities. Plus, it may help them notice parks you could look into (perhaps as they’re traveling or even driving to work).
Of course, what your friends may be able to do is also something you can try to do. Simply pay attention as you’re out and about, for one. Also, it’s not just your eyes you can keep on the alert. It’s your ears, too. Things you hear in general conversation could later turn into an opportunity.
Use Google Earth
Noticing parks as you drive by them may be a useful method. However, if you don’t do too much driving (or you’re looking for parks at quite a distance from your area), you may want to try using Google Earth to “see” what’s available. Let’s say you can find something in the area you’re looking for that appears to have the right number of lots. Then, you can take the next steps: discovering who owns the park and establishing contact.
Use government records
Also, you may find government records useful for finding out who owns a particular property. These can help get you on the road to making contact with the owner(s) to see if they’re interested in selling.
Send out mailings
Another method to consider for locating distressed mobile home parks for sale is sending them mail. Come up with a list of parks in your area (or whatever area you’re looking to buy in), then send out a letter. Let owners know that you’re interested in buying parks. And be sure to make it clear how they can get in touch with you if they’re interested.
Also, consider including a promotional item that will last longer than your letter. Something that will keep you and your company in their mind even if they throw the letter out.
Of course, know that if you send out the mailing indiscriminately your letters may end up at distressed and non-distressed parks. But that’s okay because who knows when a park may encounter difficulties and want to sell? Maybe a park that seems solid today will encounter unforeseen events tomorrow and want to sell as soon as possible.
Pick up the phone
If you don’t want to do mailings, consider making phone calls. Once you’ve identified contact numbers for the parks you’re interested in, start reaching out. And consider letting people know that even if they’re not looking to sell today, you’d be happy for them to call you later if they change their mind. Leave contact information if the other person is comfortable with you doing so.
And remember, if someone’s not interested, be polite and friendly anyway. Not only is this the right thing to do, but it also could leave a good impression. Even if you’re not going to be working to buy this owner’s park now, you may end up working with them in the future. You want them to feel more than willing to reach back out to you.
Things to think about
Once you know a mobile home park is “in distress,” give it your best shot to find out why. Is it because the area its located in is also distressed? Is the job market really bad here? Are there social, political, economic issues?
Also, when it comes to finding distressed mobile home parks for sale, remember this: you don’t know till you ask. While a park may not be listed for sale, that doesn’t mean the owners aren’t interested in selling. Reach out to them and get a conversation started. Maybe they’ve just been waiting to take the plunge, and you’ll be the incentive they need to do it.
Additionally, remember that it may be useful to reach out more than once. Even if conversations or meetings with mobile home park owners don’t seem to be heading toward a sale, still be polite and grateful for the time people spend with you. Whether things are promising or not, consider sending a thank you note to express appreciation for the touring the park, meeting with the owner, etc.
The “why” behind the “how”
Generally speaking, we’ll assume that your reasoning for buying distressed mobile home parks for sale is simple. You want to turn the park around so that it’s good for you and good for residents. Exactly what this situation looks like could vary. How much you want to get in lot rent could be different depending on where the park is located.
Let’s say the big idea is for you to get a return on your investment and for residents to have a good place to call home. Obviously, this may be easier said than done, but one thing that could help is learning why the park wasn’t working out so well before you bought it. In fact, you may even be able to tactfully ask the current owner for input on this topic. Is there anything they would do differently?
You want it to succeed this time around
Knowing the area may help you do a better job with the administration of this park. Of course, if you charge lot rents that are too high compared to others in the area, that could spell problems. Moreover, knowing the applicable rules where you are may help you avoid trouble for running afoul of them.
Also, remember that what works in one place may not be right for another. Even if you own successful parks in other places, don’t count that as a substitute for learning what will be right for this area.
Learn from others
Whether you need to grow your understanding of this locale or you’d like to better grasp mobile home park investing generally, don’t try to reinvent the wheel. Learn from others. There are many possible sources of information, including:
- online classes
- other mobile home park investors
- online forums
- mobile home park residents
Being organized and systematic can help you achieve your goal of having a profitable, well-run mobile home park. Also, tracking data will let you know if the whole thing is turning out to be profitable. Additionally, don’t forget to make calculations on the front end — to help you try to avoid mobile home parks that won’t be a good investment for you.
Think well both before and after the sale
As you seek out distressed mobile home parks for sale, you’ll want to make good decisions that will serve you well in the long term. Once that park is yours, steer clear of destroyers of mobile home parks and establish mobile home park manager duties. Plus, read up on ownership of an abandoned mobile home.