Welcome back to The MHP Expert blog archive. If you’re keeping track, I’ve been discussing some of the pros and cons of Mom and Pop MHPs. Now, I’d like to switch gears to the world of Corporate MHPs. Also known as institutionally owned, these present a number of challenges for those looking to invest in the space. For starters, you’ll have less flexibility on the acquisition itself. Investors tend to have pretty tight parameters when deciding on investing in a park.
Some may want a heavy value-add park, while others might want a more turnkey, Class A, prim and proper, ages 55+ type of park. Either way, they’ll likely remain pretty rigid on what they’re looking for. That’s because they lack the flexibility to do otherwise. You’ll have to answer to their desires if you plan to access their capital. This is in contrast to a mom and pop park, who have much more autonomy in their dealings.
Don’t expect much to change once you enter the deal, either. You’ll have little flexibility in how you choose to operate the park(s). For example, the professional investor is not showing up to the site when the lawn needs trimming. They’ll instead have a reputable third party lined up to handle any necessary repairs. This presents another disadvantage, as it can run up your maintenance bill exponentially.
Next we have tenant screening. Again, in Corporate MHPs, you’ll have to sacrifice wiggle room. Their screening process is a lot more automated, and thus maintains rigidity. Whereas a Mom and Pop Park has more agency over who gets in, here you’d be at the whim of a fixed screening tool.
While a valuable tool, its strict guidelines eliminate the ability to handle things on a case by case basis. Think of it like this: a credit report doesn’t sum up a person’s existence. There may be someone whose credit isn’t up to par, but are stronger in other areas. But in the institutional arena, little markers like that are the end all be all. Zero flexibility, meaning you could miss out on a quality tenant.
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