Top 8 Surprising Tips to Immediately Sell Your Mobile Home Park

Are you looking to sell your mobile home park ? Or, are you looking to shed the responsibilities of mobile home park management by partnering with someone who knows as much about mobile home parks as yourself? If so, this article will be your missing link to making it happen.

There are hundreds of parks for sale on the market today, but if you're going to get top dollar, you can't just slap a sign on the gate and wait. Forecasting future trends within an industry gives you the advantage of making higher profits from your real estate deal.

Selling a Mobile Home Park is quite a challenging task. Most buyers are anxious to take over the business, but with the number of Mobile Home Parks getting sold each year, it's no surprise that your park may not be the only one on their list.

The first and foremost step is to look at your objectives and decide what you truly want to achieve. Do you want the business sold on a particular date, or would the sooner, the better? Do you want a specific price that will satisfy your financial goals, or do you want closure? 

You may have specific requirements for who the buyer will be; perhaps you're only interested in working with local buyers with ties to the community.

Once you've defined your objectives, it's time to figure out what's involved in achieving them. If a quick sale is essential to you, it may be appropriate to list your mobile home park ASAP instead of taking time for small fixes and park preparation.

If you're looking for a concrete price, it might be best to consult with professionals who can help guide you through preparing your park for sale and putting together an attractive offer.

If you're planning on running both businesses until they're sold, figure out what will happen next in each one. Will you keep serving as manager for the new owner? Will all employees stay on, or will any need to be replaced?

The next step in selling your Mobile Home Park  is to make a list of prospective buyers. This should include people who might be interested in buying your MHP, real estate agents and brokers that might know of someone looking to purchase a Mobile Home Park.

Once you have a list of names and numbers, you can start contacting them to let them know they are on your list and see if they have any interest in purchasing your MHP. 

If you don't have a list of prospective buyers, it is better to contact specialists at MHP Offers who will be able to make you a quick cash offer.

It would also help if you created a profile for your business listing so potential buyers can get information about the park without contacting you.

Determining the type of buyer you want to attract can help you determine if you are ready to sell and what you want for your business. An excellent place to start is with a list of qualifications and questions that would indicate if a prospective buyer is serious about purchasing your business. 

If they aren't willing to provide the information or cannot pass the tests, you may want to reconsider this sale. A good exercise for identifying a buyer qualifies to ask yourself:

1. Can I see this person living in my park? (If not, will they buy it strictly as an investment?).
2. Will this person be able to listen to my advice and maintenance suggestions? (If not, will this person be able to handle the day-to-day operations alone?).
3. Does this person have strong enough financial backing to purchase my park? (Are they affiliated with any banking institution or have access to funding?).
4. Will this person seek my input on operational decisions? (Are they open-minded enough to make changes as necessary?).
5. Will this person live in the area where my park is located? (If not, do they have someone who can manage it for them?). 

Selling a mobile home park is not a simple process, and there's no way to sugarcoat it. It will take effort, time, and money to get the word out that your mobile home park is available for sale.

You may have to pay for professional appraisals, legal fees, and other professional services that can cost thousands of dollars for your business to be ready to market at the right price. 

However, if you're willing to go through this process, you'll find that you'll have more control over who buys your property than if you were going after a quick sale. 

This is because mobile home parks are usually bought by investment groups who buy many properties at once and then hold onto them for quite a while before selling them again.

You must do your research on the business of owning mobile home parks. This includes reading up on the industry standards for rate per site and rent per lot and what potential buyers should know about the industry. 

Finally, make sure you understand the local real estate and real estate market regulations that affect mobile home parks.

If you're selling your mobile home park, the next thing you need to do is figure out what it's worth. It's great to have an established track record of profitability, bank statements, tax returns, and other documents proving that your park has been successful over time. 

If you've sold a business before, it's even better—you can put your most recent valuation on the table right away.

You need to calculate your current split between POH and TOH (park-owned or tenant-owned home). This will affect the taxes, and one way or another, it will affect the cost of buying the property as well. 

Banks and private buyers will look at financial records when determining a park's value. However, they might also consider the unique aspects of your location. For example, a garden in a desirable location with a view of the ocean would be worth more than one in an urban area or one with a picture of a freeway.

An excellent way to get an idea of how much your park is worth is to visit comparable parks for sale and figure out their asking prices. 

You can also talk with banks and mobile home park professionals about how much they think similar parks are worth. Keep in mind that some people may be biased toward lower or higher figures depending on whether they want to buy or sell the property themselves.

Many factors will affect how much your Mobile home Park is worth in the marketplace. To get the best price possible, you will have to research what others are paying for similar companies and how much it costs to run them.

While market conditions could be different from state to state, usually parks with residents being the ones who pay the bills for water and sewer are valued at approximately 70 times the number of occupied lots times your average lot rent. In this example park with 30 lots and average lot rent of $400/month can be valued at $840,000.00. For parks that take care of the bills themselves the initial multiplier drops to 50-60.

If you would rather value your park by the income approach, you must take your yearly gross income that your MHP generates and subtract all expenses but your debt payments. The result of your calculations will be your net operating income - NOI. Then, by reversing the capitalization rate formula you can find your estimated value. To do that, divide your NOI by Cap rate (you must know what is the cap rate of parks similar to yours) and you will get the value. To illustrate this formula, if your park generates $280/month per lot (after expenses) and you have 30 lots, your NOI per month is $8,400.00, and $100,800.00 per year. Parks with decent occupancy (90%+) and in good condition have an average Cap rate of 8. Multiplying the NOI by this Cap rate, gives us a value of $806,400.00.

Even if you have a professional broker working with you, you should be prepared for negotiations yourself when selling your mobile home park. You might be surprised by prospective buyers' last-minute offers or requests, so it would be wise to have a backup plan.

Improve occupancy

Occupancy is one of the key factor in your park's valuation. Based on the formulas above, if your rent in $300/month, then each filled lot can cost you up to $18,000.00 during sale. So, isn't it better to spend an extra $3,000.00 on preparing the lot and helping your new tenants by paying the moving costs? Offer free steps, skirts or decks. It will pay off for sure!

However, many owners either don't realize this or get too wrapped up in other aspects of their business to devote time to filling vacancies. In addition, many owners don't have enough tenants interested in moving into their park to fill all the empty spaces.

To increase your occupancy rate try offering incentives for tenants who move into vacant spaces. For example, offer something like discount if you pay in advance, or referral program. Anything that would make your lots occupied, especially for longer time.

Improve the quality of your park

If you're after the highest possible sale value, it makes sense to work on improving the infrastructure of your mobile home park. Does your park have roads (at least dirt ones)? Do you have lights installed next to each lot? Are the trash bins installed next to each lot? What is your sewer and water situation? Each one of these points may increase your lot rent and overall park valuation dramatically!

Enforce rules and get rid your your problem tenants

The security of any mobile home park or trailer park is one of the most difficult parts of the business. Acquiring nice, paying-on-time tenants is the dream of each park owner. Start the process by enforcing social rules, installing cameras and possibly, hiring a full time guard/manager. If anyone breaks the rules – they should no longer be a part of your community.

Increase lot rent

If you've already improved the overall quality of your park – think about increasing a rent. If your tenants will know what they are paying for and will see the improvements, increasing the price shouldn't be a problem, especially with the current inflation. The increase by $30/month on 30 lots can result in additional $63,000.00 value of your park during the sale.

Create additional sources of income

Depending on a size of your park it might have sense to offer additional services like mini storages that can be rented, parking lots for cars/RV, small outdoors movie theater, vending machines etc. Any additional income will have a positive effect on your NOI, and the final sale price.

The next step to selling your mobile home park is to prepare documentation used in the sale. Sometimes, it can be a time-consuming process, but if you do not have the documents when you are ready to begin discussions with potential buyers, you could lose out on the opportunity to sell your mobile home park. 

Because you have put so much of yourself into this business, it pays to take the time necessary to ensure that all of your bases are covered and that your mobile home park is protected as best as possible. Be sure to gather the following documents:

1. Business name registration
2. Federal Tax ID number
3. State Tax ID number
4. Copies of leases and tenant contracts
5. Any other contracts held by owners or tenants
6. You will also want any other documentation related to processing fees, sales tax issues, or permits that may apply.

Before entering into negotiations, assess your business and prepare a comprehensive document that details all the information you need to close the transaction. This will include:

1. List of property and assets (you can keep your full address private, but mention the nearest cities and your state)
2. Full park description (number of lots, occupation, POH vs TOH, utilities, financials etc.
3. Description of the area (population, employers, infrastructure, schools)
4. Descriptions of park owned homes (if any)
5. Management contracts
6. Lease agreements
7. Title report and survey (if applicable)
8. Real estate tax bills, insurance policies, depreciation schedules, and other documents for property taxes, insurance, and licenses.
9. Photos and videos of your mobile home park

Depending on your situation, the process of selling your mobile home park can take from several weeks to several years. However, by following the tips above you should be able to maximize the value of your park and find the best possible buyer.

Over the past few years, we have purchased mobile home parks owned by people who were ready to "turn the page" and move on. We would be happy to make an offer on your park too! Just fill out the form on this page and we will get back to you with a quick, fair cash offer for your mobile home park.

We hope that the above tips will be helpful to you in allowing you to sell your mobile home park a little quicker. We wish you all the best in finding a qualified potential buyer and closing the deal!