Doing Initial Due Diligence – SFR vs MHP vs Apts
Here’s one big reason Jae and I love mobile home parks. Jae and I just finished a 3-state, multi-day roadtrip in the Midwest checking up on our parks as well as visiting several other potential properties, including parks and single family homes. Recently we also spent several days looking at multi-family properties with another investment group.
Do you want to know what both of us were thinking after these exercises?
It was SO much easier to inspect the parks. Jae and I were able to drive through the park at 5 mph, with periodic stops and have a very clear evaluation of the park, its issues and the turnaround plan needed if we acquired it. Just sitting in the car we were able to assess:
- Road: Its conditions and repairs needed
- Landscaping/Trees: Trimming and landscaping needed
- Electric Pedstals: You may need to get out of the car but we can see them from the car if they are visible
- Vacancy – You can drive by and count. Its pretty easy to spot vacant homes
- General appearance: Appearance of the homes, yards, cars, etc are obvious. Its easy to identify a park’s ‘pride of ownership’ factor and make precise judgments about the people and the management.
- [Note - If a park has park owned homes you will want to be able to see them if possible.]
It took Jae and I 15-25 min to drive through a normal sized park. Of course it took just 30 seconds to get out of an absolutely scary park 
In comparison with the SFR and apartments, we needed to get our of the vehicle and inspect the homes both on the outside and inside, if possible. For apartments, we needed to ask to be able to see some of the open units and ‘down’ units if they existed. This took quite a bit longer!
Why is it so much easier to evaluate a park? Because there are less moving parts to the business. Excluding park owned homes, office buildings or other amenities, there isn’t much to be concerned about. We don’t need to check boiler systems, roofs or foundations. This simplicity directly correlates to the efficient business model which land lease mobile home parks can be.
