Mobile Home Park Due Diligence 1

When you placed a mobile home domestic park under contract, you’ll sincerely want to have a stipulation in the contract a good way to permit you to verify what the seller has stated up to now and evaluate the overall feasibility of the acquisition. Due Diligence will look at the physical, monetary, demographic, and marketplace feasibility of the challenge. This time period is generally between 30 and 60 days. In conducting your due diligence, you are looking to pick out something that poses a capability issue that you can exchange or restore. These generally address the park’s cleanliness (junk & trash piled up), mismanagement, loss of rule enforcement, collections, and prices that can be decreased.


But extra importantly, you’re seeking out the one’s problems that you may not be able to repair, or so one can be very high-priced to restoration. These styles of troubles normally address the scale of the lots, reputation, troubles in the local marketplace, flood plains, drainage problems, terrible configuration of plenty, water, sewer, electric powered, and gas line troubles.

In engaging in your due diligence, you could call on experts in surveying, accounting, marketing, financing, plumbing, electric, and legal.

Ask the Seller to provide you with the subsequent (if relevant):


1. City, County, and State Permits and Licenses

2. Sewer Plant Records and Readings

3. Water Well Tests and Compliance Records

4. Existing Surveys or Environmental Reports

5. Water and different Utility Meter Reading Records and Formulas

6. Property tax payments for the remaining 2-three years

7. Copy of modern-day coverage and binder showing rates and coverages

8. Current staffing list such as function, wages, activity descriptions

9. Any drawings and maps of the park and infrastructure and size of lots

10. Any Contracts as a way to be transferred to the consumer at closing (laundry, trash, smartphone)

11. Signed Rules and Leases for each resident

12. Bank Statements

13. 2-3 years Tax Returns

14. 2-three years Profit and Loss

15. Certificates of Occupancy


16. List of Capital Expenditures for the last 3 years

17. Listing of any current park infrastructure issues(water, sewer, gasoline, electric)

18. Rent Roll with unique homesite variety, name of the resident, circulate-in date, monthly hire, modern-day balance, additional fees, number of occupants, and a quick history of the resident (accurate resident / horrific resident, special instances, and many others)

19. Names and phone numbers of all contractors used inside the last few years – plumbers, electricians, propane, gasoline, roto rooters

As you’re receiving these statistics from the Seller, you will want to assess it with the opposite information you obtain from outdoor assets.

Fifty-two basic areas to cowl in the Due Diligence duration now not necessarily in any order:

1. Park Location Issues: Is it close enough to shopping, employment, faculties, transportation. Will capacity citizens be capable of finding the park?

2. Flood Plain: Is the park placed in a flood simple? If so, while changed into the ultimate time, it has flooded? If the park does flood, are the houses excessive sufficient to stay undamaged? Do the homeowners have flood insurance?

3. In most cases, shopping for a park in a one hundred yr or 500 yr flood region will not come returned to bite you. However, you should, in reality, recognize the dangers involved. Most of the time, your renters will have to deliver flood insurance, and your lender will require the identical to your buildings and utility connections.

4. Noise Problems: Loud outdoor noise can regularly be a deterrent for living in a sure cell domestic park. Being located near highways or busy streets and also nearby trains can be very stressful to capability citizens.

5. Find out if the park is required to be licensed and, if so, that it has the required license. You will need to check that the park is running in compliance with the license. If a park has 50 devices but is licensed for the most effective 25, you may have potential issues. The license may be issued by using the State, County, or Local authorities. Often it’s far issued with the State Board of Health. Some towns have legal guidelines that if a positive percentage of the houses in a park with “grandfathered” zoning is destroyed, then the ones plenty will no longer be allowed to be rented again. This can appear from fire, tornado, storm, and many others. Check the neighborhood codes.

6. Review any park inspection reports performed via the State Board of Health or other City/County inspectors. In a few states, specifically, those wherein licenses are required, the kingdom does an annual inspection and produces a record with notices of any violations. It is ideal for peering at those violations and making sure that they have got been corrected.

7. If you’re thinking about hiring modern management, you could need to have buddies or pals make some calls to the property and see how the management handles the calls. Also, if you visit the supervisor’s home and it isn’t stored up exactly and have a hard and fast of policies for themselves, it can be an illustration that you have to search for different control.

8. After you have the park under contract and usually after you have got the proprietor’s permission, it is simply an awesome concept to interview some of the cutting-edge park citizens. They are commonly complete of information when it comes to finding out how the park is truely operating. You will often pay attention approximately water problems, sewer issues, and any other commonplace issues through talking to the citizens.

9. Another desirable supply of records would be the neighborhood cell, domestic dealers. They usually realize approximately the maximum of the parks. They might provide you with statistics at the park’s recognition, whether or not they’ve within the beyond and could inside the destiny refer the park to ability citizens, and so on. You may find out if they have change-ins or different reasonably priced homes on the market.

10. If feasible, you may need to go to the park at diverse times of the day, morning, midday, after dark as you will be capable of seeing the park as it’s far. It is also beneficial to peer the park at some point of the week and on the weekends. This will come up with a better indication of parking, occupancy, lighting, and noise degree.

11. The neighborhood Chamber of Commerce is likewise a wealth of facts. They can come up with statistics on populace developments, new and modern-day employers, ability plant shutdowns, and the overall market situations of a place.

12. Local Real Estate Brokers can also offer a wealth of statistics on the vicinity and marketplace and real estate outlooks.

13. Good faculty districts are regularly an amazing location for personal parks. Often, these districts are in wealthy areas of the town, and much less prosperous humans are often seeking out low-priced housing in these areas to allow their youngsters to be in those appropriate faculty districts.

14. Contact the Property Tax Office: to test tax prices and whether taxes are contemporary. Learn what their assessment methods are so you can estimate how much you’ll be paying in taxes if you buy the park.

15. Verify the rent rolls and copies of receipts to affirm that the amount truely accrued is being reflected efficaciously. Often, park proprietors neglect to tell you that they supply a few human beings discounts (seniors, buddies, relatives, and so forth).

16. For coverage functions, make sure to verify the pet restrictions and the enforcement of such. Most insurance providers do not allow risky breeds of dogs or even dogs over 20 – 30 pounds.

17. Water Lines: what are they made of? Are there symptoms of water leaks? Is the water stress suited? You will often have some areas of the park where the water strain is an awful lot decrease than the rest.

You can evaluate payments from the software agencies from the equal month over a couple of years to find any foremost issues/leaks.

18. Sewer Lines: generally, you may have older sewer lines: clay pipe and skinny walled plastic pipes. Clay pipes will allow big tree roots to begin developing inner with a purpose to begin inflicting backups. Also, clay & thin-walled sewer pipes will generally tend to collapse and then plug up. You may be able to have a digicam check out the pipes, in addition to having them professionally blown out with excessive pace water jets as periodic upkeep.


19. With an electric provider, you will want to check whether the electrical is above ground or beneath a floor. If above, you may usually be liable for the primary electric powered poles, so check the electric poles to see if they’re rotting near a ground stage. These may be quite high priced to update. Another capability electric powered trouble is that maximum of the houses now requires 100 to two hundred amp provider. Many of the older parks have an electric carrier with a 30-50 amps provider. This will commonly require an improvement to generally value $500-$800 in elements and exertions to upgrade.

20. Gas provider. If you are responsible for the fuel meters and contours, you may need to have the system stress examined as a small gasoline leak can reason your carrier to be shut down until it is placed and repaired. Likewise, it is an amazing idea to have this done on a habitual foundation to keep away from capability issues.

21. Fire Hydrants positioned nearby. A question your coverage enterprise is positive to invite.

22. Trees: In many instances, you may see a complete park of huge beautiful timber, and its can appearance actually high-quality. However, these trees will certainly fee you down the street. You need to maintain them trimmed, eliminate antique and useless timber, clean up the leaves every year, as well as auger sewer lines that end up full of tree roots.

Falling branches are often one of the maximum likely coverage claims.

23. Roads: are the roads inappropriate restore, do they want to be resurfaced, are they huge enough, are there speed bumps, and so on? Roads that are not maintained are often one of the maximum sizable complaints you will get out of your citizens.

24. Drainage Problems: It is advisable to realize how a cellular domestic park drains after heavy or sustained rains. Even if the park is not in a flood quarter, it may have horrible trouble with standing water and puddles. Getting rid of the extra water can be high-priced and hard.

25. Sewer Plants: while a cellular home park has an actual sewer device, lagoon, or is on septics that is every other region in that you have to without a doubt find out as a lot as viable. You need to recognize how the machine operates, whether it’s miles assembly the EPA pointers, what it prices to run, what upgrades have been made, whether or not it is jogging at complete ability, do you want to have a licensed operator, how many hookups it’s far licensed for, etc.?

26. Lift Stations: are they good enough, do they have caution lighting, are there backup pumps?

27. Walk property during the day and at night. You will uncover many issues, including smells, canine barking, events, hidden trash & junk, water leaks, sewage puddles, antique electrical containers

28. Water Wells: what sort of gadget, how deep are the wells, water stress, any previous violations or issues, backup structures, what does it cost to perform, if the proprietor is the Licensed operator is their operators within the area which are available and affordable to function, are you able to send your supervisor to lessons to gain the operators allow/license. How many spaces is it certified for?

29. Who will pay what? Utilities, Cable, Mowing, and so forth: discover all the ones hidden expenses that the proprietor takes care of affordably (does he haul the trash to the sell-off?). If the trash isn’t being hauled off, what are the citizens doing with it?

30. History of Rent Increases: have the rents been elevated on an everyday basis?

31. Count the plenty – a few may additionally be combined, and many parks have bizarre numbering schemes.

32. Late Fees: Look at the bank deposits and compare them with the rent roll. When are the rents coming in, are late expenses being charged?

33. Security Deposits: get a certified listing of Security Deposits from the proprietor. If afterward, someone claims to have a deposit that isn’t on that list, you have it in writing from the proprietor.

34. Check the leases: is there any extraordinary language within the leases? Are they month to month? Are there long-term leases to make it difficult to elevate rents or submeter water?

35. Hazardous Materials: don’t even recollect shopping for a park without having a Phase 1 environmental look at doing. If there are any underground garage tanks, above-ground garage tanks, chemical drums, buried waste, lagoons, stained soil, fuel pumps, vehicle repair shops, electrical transformers, asbestos in construction, and many others., you will be prone to American Gov’t for hundreds of thousands in cleanup prices.

36. When looking at a park, make sure you look at whatever doesn’t seem right. Are there easements that don’t make an experience, are there oil wells on the belongings, and many others?

37. It is likewise beneficial to achieve a present-day or current survey of the park. You need to make sure you are shopping for what you suspect you are buying. Are a number of your cell houses over the property line. Are there fences or sheds over the property traces? With a brand new owner, the adjoining land proprietors may also use this time to effect some of those problems. Check the prison description with the survey and with your agreement and assurance deed.

38. Seller says the property can be increased. Make positive the modern zoning will permit the proposed enlargement. Also, make sure that it’s miles possible: Where can you tap into the water, sewer, and other utilities? Do the current water wells and sewer plant has the capability to carry extra houses. What are the impact fees? What are the possible expenses to increase?

39. Lot Sizes: one of the most important issues with older mobile home parks is built for 10-14′ x 50-60′ homes. As most of the more recent houses are sixteen’ x eighty’ and up, this could emerge as an actual problem when changing houses or filling vacant plenty. Besides, a few cities/counties are requiring homes to be a sure age. Thus, shifting an older 12′ x 50′ domestic into your park might not be a choice.

40. Vacant websites. There are 50 websites and 10 vacant. Are those 10 websites ready and capable of taking new houses? Are the water and sewer lines marked? Is there gas and electric power? Does the electrical need to be upgraded earlier than accepting a new domestic. What are the setback requirements? What age of homes can be moved into the park? Is the plenty in such an arrangement in which a domestic can surely be located every lot without transferring other homes around?

41. Are the present-day units tied down? Many older parks have gadgets that might be in there and have never been established properly, such as being tied down consistent with code, if even at all. I even have experienced this two times in the past. One time a twister hit one of my parks (actually, 2 parks after every different). All in all, we lost over forty houses out of 100, and the houses that have been truely tied down and set up effectively had been a whole lot less damaged than the ones that were no longer. Another time we had some excessive winds in certainly one of my parks and a pair of the houses blew over as they have been not tied down.

42. Street Lights: drive via at night. Who is responsible for the street lighting fixtures? Who will change the bulbs? If a mild goes out, who will fix it?

43. If at all possible, get a plat map. Suppose one isn’t to ask the owner to attract one to the first-class of his know-how and find any cleanouts, shutoffs, and so forth. This is crucial to have in case of line breaks and different emergencies in the future. The seller might not be around to help.

44. Does the park have a good enough device to perform? If the modern-day owner has a pickup, tractor, mower, ensure to negotiate for this as it will are available on hand within the future, and you do not need to start shopping for all of this the month is taking over. It is a good idea to get a listing of all the elements and equipment currently being used to operate the park and blanket it in the acquisition.

45. Market Survey: Find out what different parks are charging and what it consists of, discover their vacancies, flow in incentives, reputations, and so forth.

Compare the expenses of renting unmarried own family residences(SFR’s), Apartments, Duplexes with the fee of purchasing a cell home and paying a lot lease.

What does an SFR of similar size sell for in the location? What are the payments on shopping for an SFR and shopping for an MH, and paying lot lease?

Also, find out what other park regulations can be for the age and styles of homes. It may be that your park will fill the area of interest of getting the best more modern homes or the older homes.

46. Visit the making plans branch to see if any new parks can be built and the area of any vacant land zoned for cell domestic parks improvement.

47. If you’re going to buy the park and inside the method purchase houses to hire or sell, you would possibly want to the region a few teaser commercials inside the neighborhood newspapers to peer what form of response you get. If you do not get any calls, it can be an excellent indication of the marketplace and the feasibility of filling the park up.

48. Find out the eviction legal guidelines. What is involved in the manner: time frame, paperwork required, and so forth. Also, test with different park proprietors/managers in the vicinity to peer what their enjoy is.

49. Zoning: can houses be placed anywhere within the county, which creates big competition. At what age oughta home be to be moved right into a county, and what are the other restrictions on homes being moved in, bought, and many others.

50. Also, if a city has prolonged or goes to extend utilities for your vicinity, are you required to hook on, and if so, at what value?

51. Get in touch with the local corporations as they may be a great source of facts: police, planning, engineering, software, and constructing departments.

52. Removing abandoned homes – bear in mind making vendors pay for this – at the least, find out what it will value and what options you need to eliminate the deserted houses.

53. If the park you are buying has condo units or hire-to-personal devices, make each attempt to test those out. You will not most effectively see how the gadgets are being looked after by the citizens; you’ll also demonstrate how the modern owner runs his commercial enterprise. If you locate holes or tender spots in the ground or walls, terrible carpeting jobs, and such, this could be an illustration that the proprietor is not only doing brief fixes at the homes but additionally in the park preservation as nicely.