Manufactured-home parks are very profitable

Attractive street in a resident-owned community.

ROC-NH logoYou would probably be surprised to learn how investors view manufactured (mobile) home parks like yours.

They look at your neighborhood and see money in the bank.

A 2014 New York Times story on one of the largest corporate park owners in the United States reported: “they have posted an annual return of roughly 25 percent, a rate at which they and their investors are doubling their money about every four years. By catering to those living on the economic margins, their parks generated more than $30 million in revenue last year. More than half of that was profit.

A business in which 50 cents of every revenue dollar is profit is doing very, very well. And that revenue comes directly from your wallet—through the lot rent you pay.

Assume that your park is bought by a new investor owner. A portion of the total lot rent you and your fellow homeowners pay covers expenses like maintenance, plowing, taxes, and the owner’s mortgage. The rest—often one-fifth or more—goes into the owner’s pocket as profit.

In a 50-home park where rents are $400 a month, the owner takes in $20,000 a month and may pocket $4,000, or more.

Below are two versions of a bucket diagram. It illustrates where your money goes when you pay rent.

This first diagram represents what happens now. Each month, you and your neighbors put money in the bucket—that’s the rent you pay to the owner. The owner, who controls that bucket, drains money from it for two purposes: paying expenses like maintenance and plowing, and making a profit.

Illustration showing where rents go in an investor-owned manufactured-home park.

Investor-owners can raise rents anytime they want to. They may increase rents if maintenance and operating costs increase. They may also increase rents if they want to increase their profits.

The next diagram represents cooperative ownership. The cooperative controls the bucket. Each month, you and your neighbors “put money in the bucket” by paying your lot rent (just like you do now). The money left over after the co-op's bills are paid can go into its reserve account (to cover emergency or planned projects). Over time, some cooperatives can charge less rent.

Illustration shiowing where rents go in a resident-owned community.

An independent appraiser recently did a study that found that lot rents in ROCs are as much as 17% below rents in similar corporate-owned parks

Where the money to buy the park will come from

Most cooperatives buy their parks with a commercial mortgage from the New Hampshire Community Loan Fund, often with a local bank. ROC-NH will walk you through this process. In some cases, the loan will also include money for immediate repairs.

Your combined rents pay the costs of operating the park, and of making the mortgage payments.

From 1984 through 2016, the Community Loan Fund had made 423 loans to manufactured-home cooperatives, totaling $113 million.

The Community Loan Fund is not a state or federal government agency; it is a nonprofit community development financial institution (CDFI) that works throughout New Hampshire.

The money we lend to resident cooperatives has been invested in the Community Loan Fund by individuals; organizations such as churches, foundations and businesses; and even other resident-owned communities.

ROC-NH™ is a program of the New Hampshire Community Loan Fund, Inc. and a ROC USA® Certified Technical Assistance Provider. ROC-NH is a registered service mark of ROC USA, LLC.