Investing in a mobile home park can be a smart way to build potential steady cash flow and long-term wealth. But not every opportunity is a good one. Without proper due diligence, an investor might end up with what’s often referred to as a “money pit” – a mobile home park investment that drains time, energy, and capital without producing returns.

The good news is that there are practical steps investors can take to reduce the chances of buying a money pit mobile home park. Let’s walk through the most important considerations before making a purchase.

1. Understand the Infrastructure in the Prospective Mobile Home Park Investment

The backbone of any mobile home park is usually its infrastructure. This includes water lines, sewer systems, electrical connections, and roads. Older mobile home parks often come with aging infrastructure, which may require costly repairs.

What to watch for:

• Private utilities like lagoon systems or private treatment plants can present much higher risks than city services. Well water or septic systems are generally more manageable but still not as ideal as city services, as we’ve found from experience.
• Cracked or deteriorating roads signal long-term neglect and upcoming capital expenses.
• Poor drainage or standing water on-site could lead to erosion, tenant dissatisfaction, or code violations.

Hiring a professional to inspect the systems before closing can uncover hidden issues that might not be visible on a basic walkthrough.

2. Analyze Occupancy and Tenant Quality in the Prospective Mobile Home Park Investment

High occupancy might look great on paper, but the quality of the tenants matters just as much. A mobile home park filled with non-paying residents or tenants who frequently break rules can quickly turn into a liability.

Tips to evaluate tenant quality:

• Ask for rent rolls and compare them against bank statements to verify payment history.
• Review tenant applications, if available, to understand past screening practices.
• Look at the rules and regulations and determine whether they’ve been enforced.

It may help to talk to current residents. They can offer insights into how the mobile home park is managed and whether there’s a sense of community or ongoing conflict.

Download our FREE eBook on the Top 20 things to know BEFORE investing in mobile home parks!

3. Verify Lot Rent Collections and Expenses

A mobile home park’s income should be clear, consistent, and well-documented. Sellers sometimes inflate income by counting late payments or including non-recurring fees. Similarly, they might underestimate expenses.

What to do:

• Cross-reference rent rolls with bank deposits to verify actual collections.
• Ask for at least 12 months of financials to understand seasonal trends.
• Scrutinize utility bills, maintenance costs, property taxes, and insurance premiums.

If the numbers don’t make sense or if records are missing, proceed with caution. A lack of documentation can be a red flag.

4. Don’t Overlook Park-Owned Homes in the Prospective Mobile Home Park Investment

Mobile home parks can operate under different models. Some parks only rent out land to tenants who own their homes, while others include “park-owned homes” that the landlord is responsible for maintaining.

Why this matters:

• Park-owned homes generally require more time and capital to manage. They often depreciate over time and may bring lower-quality tenants if not managed well.
• A mobile home park with many park-owned homes might resemble a low-end rental business more than a land lease community.

Try to assess the condition and age of these homes. Rehabbing or replacing units can eat into your return potential quickly.

5. Check Local Laws and Zoning

Zoning laws and local regulations can make or break a mobile home park investment. Some municipalities frown upon mobile home parks and may limit improvements or expansion.

What to research:

• Is the mobile home park legally conforming to current zoning laws?
• Are there rent control laws, licensing requirements, or restrictions on evictions?
• Has the city shown signs of redevelopment pressure in the area?

Understanding the regulatory environment can help prevent future surprises, especially when it comes to raising rents or upgrading infrastructure.

6. Evaluate Management Systems

A mobile home park is not a “set-it-and-forget-it” investment—at least not in the beginning. If the current owner self-manages, and you’re planning to hire a third-party manager, the operational costs might change dramatically.

Questions to ask:

• Is there an on-site manager? If so, what are their duties and compensation?
• Are rent collections handled online, by mail, or in person?
• How are tenant complaints and maintenance requests managed?

A poorly managed mobile home park can become a money pit even if the property itself is in decent shape. Efficient systems are key to long-term success.

7. Study the Market Fundamentals

Even a well-run mobile home park can struggle if it’s located in a declining market. Demand for affordable housing is strong in many areas, but it’s not universal.

Market factors to examine:

• Job growth and employment rates in the area
• Median home prices and apartment rents—how does lot rent compare?
• Vacancy rates in other nearby mobile home parks
• Tenant base stability—are residents typically long-term or transient?

A mobile home park in a weak or shrinking market may struggle to retain tenants or attract new ones, which affects both income and resale value.

8. Avoid Rushing the Process

It’s easy to get excited when a mobile home park appears to check all the boxes. But rushing into a deal without proper diligence can lead to costly mistakes.

Smart steps before closing:

• Perform a thorough physical and financial due diligence checklist.
• Involve experts like attorneys, inspectors, and accountants.
• Get everything in writing—seller promises, agreements, and lease terms.

The more time you spend understanding the asset before closing, the less likely you are to encounter expensive surprises afterward.

Final Thoughts: Be Cautious, Not Fearful

Avoiding a money pit mobile home park investment doesn’t mean avoiding mobile home parks altogether. In fact, many investors have found success with the asset class by following a methodical and informed approach.

Every deal is unique. What works well in one market or community might not translate to another. By focusing on infrastructure, tenant quality, financials, and local regulations, investors can likely stack the odds in their favor. There are no guarantees in real estate, but with due diligence and a healthy dose of caution, it’s possible to avoid the most common pitfalls. Good luck!

Are you looking for MORE information? Book a 1-on-1 consultation with Andrew Keel to discuss:

• A mobile home park deal review
• Due diligence questions
• How to raise capital from investors
• Mistakes to avoid, and more!

Disclaimer:

The information provided is for informational purposes only and is not investment advice or a guarantee of any kind. We do not guarantee profitability. Make investment decisions based on your research and consult registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations.