Welcome back to The MHP Expert. Today’s topic is what exactly is a distressed MHP? The first thing to know is, there’s not much distress in the MHP world. Historically, this has referred to when a seller’s revenues are not able to cover their expenses.
That would, in effect, be a stressful proposition. But for the last decade, it hasn’t been much of a thing. This is because of the rate of return from the amount of cash flow the opportunity provides. Even if a park is rundown, that suggests more about the owner’s laziness, as opposed to the actual nature of the industry. And don’t tell them we told you, but there are plenty of lazy owners out there.
How To Spot A Distressed MHP
If you’re looking for something that has a distress, the first step is to phone into the market you want to invest in. From there, talk with the permit people to find out if there’s any septic, or private well or sewer systems that have had breaches of compliance.
This could indicate that there’s some economic stress, as that can often be an expensive fix. As such, there’s a chance that the property is a headache that the seller wants to get out from under. Watch out, though. Buyers will often use this as leverage to raise their asking price.
Mobile Home Owners Vs Park Owners
That said, there are more distressed mobile home owners, than there are mobile home park owners. If your goal is to find just one home, or homes, condition is also a good indicator of stress. If it’s falling apart, the owner may be willing to sell it pretty cheap just to get it off of their hands.
But from a community standpoint, it’s still pretty rare to find this. That said, with interest rates on the rise, and a recession on the horizon, more distress may arise. This will impact revenues, and may make keeping up with expenses a bygone possibility.
The MHP Expert
Even with the increased interest rates, there’s still a thriving industry when it comes to MHP. While you may feel the brunt of this as an owner for a brief period, the chance the refinance will eventually come, setting you back on the upside. Lose money now, for the big payoff later.
Let’s recap. We feel distressed is not the way to go looking for these parks. But, if you choose to, the best way is to consult with the municipalities as outlined above. Have more questions regarding the industry? In need of a qualified broker to help you along the way? Contact The MHP Expert today to learn more. You can browse our offering on our service page and pick the route best for you!