Mobile Home
Parks

Why MHPs work

• Tenant owns the home. In a TOH (Tenant-Owned Home) park, you rent only the lot. Maintenance of the structure is the tenant’s problem. Your expense ratio runs 30–40% vs. 50% on multifamily.
• Moving cost is a moat. Physically relocating a mobile home costs $5,000–10,000 and many pre-1976 homes can’t be moved legally. Tenants tolerate rate increases others wouldn’t.
• Fragmented ownership. 90%+ of US parks are mom-and-pop owned. Most have not raised lot rent in 5–10 years. Below-market rents are the #1 value-add opportunity in real estate.
• Recession-resistant. MHP is workforce affordable housing. Demand rises in downturns as tenants downsize from apartments.
• Declining supply. 500+ parks close each year for redevelopment vs. <10 new parks permitted. Supply compresses indefinitely.

POH vs. TOH — critical distinction

This is the most important underwriting line:

• TOH (Tenant-Owned Home). Tenant owns the unit. You rent the lot at $300–600/month. Structure maintenance, insurance, and depreciation are the tenant’s. Clean operating model.
• POH (Park-Owned Home). Park owns the home. Rents $700–1,200/month combined (rent + home). Structure maintenance, insurance, and depreciation fall on you. Cash flows higher per unit, but operations resemble apartment management with higher OpEx, turnover costs, and exposure.

Fannie Mae and Freddie Mac MHP loan programs require 80%+ TOH in mature stabilized parks. A park with 40% POH trades at a meaningful discount and requires community bank or bridge financing. Value-add operators convert POH to TOH by selling homes on seller-financed notes (CASH — Community Affordable Home Sales) and reclassifying rent as lot rent.

Park classifications

• 5-star. Luxury active-adult 55+ with clubhouse, pool. Paved roads, landscaped, all double-wides. Cap rates 5–6%.
• 4-star. Clean family park, mix of single-wide and double-wide TOH. City utilities. Cap rates 6–7%.
• 3-star. Workforce family park, mostly single-wide TOH, gravel roads. Cap rates 7–9%.
• 2-star. Mixed POH/TOH, mom-and-pop operations, deferred maintenance. Value-add opportunity. Cap rates 9–11%.
• 1-star. Below-workforce, high crime, high POH, infrastructure failing. Speculative. Cap rates 12%+ (on broken trailing operations).

Infrastructure — where deals blow up

• Public utilities. City water, city sewer. Lowest-risk. Always prefer.
• Private well + city sewer. Well pump failures $3,000–8,000. Water quality compliance EPA SDWA. Manageable.
• City water + septic/lagoon. Septic fields fail every 20–30 years, $30,000–150,000 replacement. Lagoons require EPA/state permits and can’t be cheaply replaced.
• Private well + septic/lagoon. Highest risk. Skip unless you’re a veteran operator with capital for infrastructure replacement.

Lead pipe laterals (pre-1986 parks) are an environmental liability. Electrical pedestals (post-1976 manufactured housing standard requires 100A) may be 40A on older parks, requiring $2,000–4,000 per pedestal to upgrade. Budget infrastructure capex at $1,500–3,000 per pad per year on any legacy park.

RUBS — the water submeter value-add

Most legacy MHPs master-meter water and absorb the bill. RUBS (Ratio Utility Billing System) or actual submeter billing shifts water cost to tenants — often $30–60/month per pad. On a 100-pad park, that’s $36,000–72,000/year of additional NOI, capitalized at 7% adds $500,000–1,000,000 of value.

Installation: submeters at each pad, reader subscription (WaterWatch Corp, AquaHawk), bill-back via property management software. Total install $500–1,500/pad. Payback in 6–18 months. State water utility laws vary — TX/CA restrict water submetering; most states allow it.

Financing

• Fannie Mae MHP. Institutional 80%+ TOH, paved roads, no RVs, $2M+ loan size. 5/7/10 year fixed, 30-year am, 70–75% LTV, non-recourse.
• Freddie Mac MHP. Parallel program to Fannie, sometimes looser on POH share.
• CMBS. Institutional 5-star/4-star parks above $5M.
• Community banks. Smaller parks $500k–5M, 5 year balloons, 20–25 year amortization, 65–75% LTV.
• Seller financing. Very common in mom-and-pop acquisitions — 10–20% down, 7–9% interest, 20–25 year amortization, 5–10 year balloon.

Lot rent economics

100-pad park, TOH, city utilities, 3-star quality:
  Current lot rent:           $350/month
  Market lot rent:            $475/month
  Current occupancy:           90%
  Current revenue:           $378,000
  OpEx (30% of revenue):     $113,400
  Current NOI:               $264,600
  Current value at 8% cap: $3,307,500

Year 1–3 plan: raise to market + RUBS
  Stabilized lot rent:        $475/month
  RUBS recovery:              $45/month
  Stabilized revenue:        $562,000
  OpEx (28%):                $157,000
  Stabilized NOI:            $405,000
  Stabilized value at 7% cap: $5,785,000

Value created: $2,477,500 over 3 years

Common pitfalls

• Private utility nightmare. Lagoon sewer fails EPA inspection. Replacement $150,000+. Park becomes uninhabitable until fixed. Do not buy a park with private sewer without an operator partner who has done infrastructure replacement.
• POH regulatory creep. MHP operators with POH are landlords subject to tenant protections. Some states extend manufactured housing tenant protections (CA MRL, FL Chapter 723). Evictions slower and more expensive.
• Fill cost on vacant lots. Filling a vacant lot means buying a used home ($10,000–25,000), moving it ($3,000–6,000), reconditioning ($5,000–15,000), marketing and financing it to a buyer. $30,000–50,000 all-in per pad. Not a 1-month payback.
• Class action risk. Large MHP operators (Havenpark, Sun Communities) faced class actions over rate increases, fee layering. Keep operations defensible — reasonable increases, transparent notice, legal lease forms.
• Declining rural markets. A park in a declining population county is a wasting asset. Check 10-year population and employment trajectory before buying.
• Frank-Dodd on POH. Selling park-owned homes to residents on seller financing triggers RMLO and SAFE Act compliance unless structured as lease-to-own. Use a licensed RMLO or third-party originator.
• Zoning non-conforming. Most MHPs are legal non-conforming — allowed to operate under current zoning but can’t be rebuilt if destroyed. Insurance and financing both struggle with non-conforming status.