Definition
A Mobile Home Park (also called a Manufactured Housing Community) is a residential real estate property where tenants own their manufactured homes but lease the underlying land (pad) from the property owner. Income is primarily derived from lot rent.
Ownership Structure
- Park-Owned Homes (POH): Owner rents both home and land.
- Tenant-Owned Homes (TOH): Tenant owns home; landlord rents land pad.
- Hybrid Communities: Combination of POH and TOH units.
Revenue Model
- Lot rent (primary source)
- Utility billbacks (water, sewer, trash)
- Late fees and ancillary charges
- Home sales commissions (in some communities)
Advantages
- Low capital expenditures: Tenants often maintain their own homes.
- High tenant retention: Moving a manufactured home is costly.
- Affordable housing demand: Structural supply shortage in many markets.
- Stable cash flow: Strong demand in workforce housing segments.
Key Performance Drivers
- Local affordable housing supply
- Population and income growth
- Rent control regulations (in certain states)
- Utility infrastructure condition
- Occupancy stabilization
Risks
- Regulatory risk: Rent control or tenant protection laws.
- Infrastructure risk: Aging water, sewer, or electrical systems.
- Reputation risk: Public scrutiny around rent increases.
- Concentration risk: Smaller tenant base in small parks.
Example
A 120-pad mobile home park with 95% occupancy and primarily tenant-owned homes may produce stable NOI with limited repair obligations compared to traditional multifamily.
Underwriting Considerations
- Occupancy and historical turnover
- Lot rent versus market comparables
- Utility expense structure and submetering
- Infrastructure inspection (water/sewer lines)
- Local zoning and rent control policies
Investor Applications
- Value-add strategy: Improve operations and adjust below-market rents.
- Utility optimization: Implement submetering programs.
- Stabilization play: Fill vacant pads with new homes.
- Affordable housing exposure: Target workforce demographics.