Investing in Mobile Home Parks - The Good and Bad

I own a mobile home park and would consider buying another.  Mobile home parks are often overlooked opportunities.  I would imagine this is because investors are chasing million dollar opportunities, i.e., something to show off.  But, I see it a little differently. I'm a numbers guy.  If it makes money, no matter how much or how little, I'm interested.


Below, I have summed up the pros and cons of investing in mobile home parks.  I'd love to hear other investors' thoughts and experiences, so please leave a comment below.


PROS

• They are not building them anymore.  Most mobile home parks were built between the 60s and the 80s.  Many are such good money makers that they are passed down through family generations.  Parks are limited goldmines, so if you can find one, you can make awesome money!
• There are 2 cash-flow options:

1. You can lease the mobile homes and land.
2. You can sell the mobile homes in the park and just lease the land to the owners.  It's a great option if you don't want tenants calling you about broken toilets.  Often, you can recoup most of the money you spent buying the park.

• There are deals out there.  If you're patient, you can find great mobile home parks in smaller cities/towns with incredible cash-flow.  I have found that this typically happens when a park owner has moved out of state.  One word of advice is DO NOT buy a vacant park.  There is a reason why they are vacant.  They probably have a bad reputation due to past management.
• Mobile homes can last for decades.  There is a tendency to think of a mobile home that was built in the 60s or 70s as junk.  Not so!  If it's been taken care of, these older homes can be just as sturdy, clean, and in great shape, comparable to a brand new one.
• There is always a need for cheap housing.  You won't have to worry about market trends or a recession; there will always be a demand for your mobile home if it's in a good park.

Cons

• They are not building them anymore.  This point was under the "pros" heading, but there is a reason that they aren't building mobile home parks anymore.  One reason is that cities and towns frown upon mobile home parks, considering them an eye sore.  Another reason is that there are now new size regulations to build a park.  You probably can't cram 4 mobile homes onto a .25 acre lot with 2 septic systems like you used to.  New rules on zoning, acreage size and age limits prevent investors from building new parks.  You might end up building outside city limits, therefore creating an inconvenience for tenets.
• Septic systems scare me.  The well-known rule of thumb is that septics last an average of 30 years.  Since most mobile home parks are 30 years or older, the septic system might be nearing the end of its life.  If the previous owners have been proactive in pumping the tanks, then perhaps the tank will last 50 years, BUT who knows!  If the tank is 30 years old, it could have 30 minutes left or another 30 years.  If a septic tank goes kerplunk! and you need to request a permit from the city to have another one put in, the city might stop you due to new regulations and ordinances.  If the city won't let you put in a new septic system, then you might lose a mobile home and cash-flow.  If you can find a park that's on a city sewer, it's a much better way to go.
• Polybutylene is your enemy!  Polybutylene is a water piping system that was used in homes from the 70s through the early 90s.  There was a billion dollar class action lawsuit against Shell Oil, the manufacturer, in the 90s, and polybutylene can no longer be used under US building codes.  Many of the mobile homes (but not all) from the 70s and 80s will have this type of crappy plumbing (pun intended).  It's terrible stuff.  They get pinhole leaks that have to be stopped.  Plumbers will recommend re-plumbing the whole home.  The re-plumbing will cost more than the mobile home is worth.