Everyone says parks are the best cash flow in real estate. What's the catch nobody mentions to new people?

tally, the infrastructure. I've walked a couple of these with a contractor's eye and the pattern is the same. The park was built in the sixties, the water and sewer lines were put in by whoever owned it then, and nobody has mapped them since. The county doesn't have drawings. The seller says it's fine because it's never failed while he owned it.

That's not a small line item. Replacing a private sewer system across 80 lots is six figures easily, and you're doing it under occupied homes with residents who can't move out while you dig. The expense ratio everyone quotes doesn't include that, because it's capital, and it lands in one lump instead of spread across years.

Add to girder: the labor side. Running a park well means somebody local who handles collections, enforces the rules, deals with the abandoned home in lot 43 and the resident whose deck is falling into the road. That person is hard to find and harder to keep, and a fund in another state can't do it by phone.

My small team does service work across a few asset types and parks are the ones where the operating burden per dollar of revenue is highest, even though the expense ratio looks low. Those aren't the same measurement. Low dollars spent doesn't mean low attention required.

The seller reason is real too. I've talked with an older owner who has held a park for thirty years, has it free and clear, and is taking a very comfortable income off it with about six hours of work a month. He has no reason to sell into a market where he'd pay tax on the gain and then have to find somewhere to put the money. He'll leave it to his kids and they'll probably be the sellers.

Question I'd have been embarrassed to ask: when people say the tenants are sticky because moving costs thousands, does that mean the resident owns the home and rents just the ground? I thought the park owner owned the trailers.

compass, both exist and the difference matters more than almost anything else in the deal. The model everyone praises is lot-only, where the resident owns the home and pays you rent for the pad and the utilities. Your expenses are low because you don't own a single roof, water heater or floor. The resident can't leave easily because relocating a manufactured home costs thousands and a lot of parks won't accept an older home anyway.

Park-owned homes are the other version. You own the housing units, you repair them, you replace them, and your expense ratio starts looking like a bad apartment building with worse tenant credit. Institutional buyers generally want to convert those to tenant-owned over time. When you see a park advertised with a great cap rate, check what fraction of the revenue is home rent versus lot rent, because they're not worth the same multiple.

windlass, that's the clearest explanation of that I've read. So on a rent roll would home rent and lot rent be broken out separately, or do sellers bundle them into one number?

wren, sellers bundle them constantly, and not always dishonestly. A lot of small owners just charge "rent" of $650 and have never separated what part is ground and what part is the house they own. You have to rebuild it yourself from the lease files and whatever they can tell you about which homes are theirs.

tally, on your actual question, my answer is that the entry is harder than the spreadsheet. I own small multifamily and every unit taught me something, and the thing parks would teach me is that the diligence is on things nobody wrote down. There's no rent roll standard, no maintenance records, no utility submeter history. The information cost is what keeps the sector fragmented, and information cost is exactly what a platform with 40 parks amortizes and a first-time buyer eats whole.

I want the boring version and I think this room has already given it. The sector's cash flow is good and the diligence is unusually hard. Those two facts sit together fine.

The part that keeps me out personally is the resident side. Raising lot rent on people who genuinely cannot leave is the return lever, and I don't want to be in the position where my income depends on how much I'm willing to push that. Other people are fine with it if the increases stay near market and the park gets better. I'd rather own something duller.

verity, that's the part I keep circling too. Six months of reading and the ethical shape of it is the only thing that's actually stopped me rather than the numbers.

What I've landed on, provisionally, is that there's a difference between a park charging $280 in a county where the comparable is $450 and getting to $380 over four years while paving the roads, and a park going from $280 to $520 in one letter with nothing changed. Both are legal in most places, subject to whatever notice and rent regulation rules the state and the city have, which vary a lot. Only one of them survives a city council meeting.

tally, the other answer nobody's said yet: financing used to be genuinely bad. Small banks didn't understand these, appraisals were a mess, and if the park had private utilities or a bunch of park-owned homes you got turned down. That's improved as institutional money validated the asset class, which is a big part of why the consolidation is happening now instead of twenty years ago. Confirm current terms with an actual lender though, this moves around.

On the renovation side, scope creep in a park is different from scope creep in a house. In a house I find rot behind a wall and add $9k. In a park I start replacing a water line and find out the lines run under the homes rather than in the drive, so now every repair needs a resident moved or a home lifted, and my $180k line project is $400k and eighteen months. Ask me how I know about the eighteen months part.

The reason that matters for your question is that a small owner who's owned it since 1990 has never done that project. He's patched. The buyer inherits every patch at once.

The land answer is worth saying plainly. A park is a land holding with an income stream attached, and the people who own land patiently don't sell it because the income went up. They hold it. That's most of why the sector is still fragmented, in my view. Institutions have been buying the parks that come loose, and the ones that don't come loose are owned by people who behave like landowners rather than like investors.

orchard's framing explains something I couldn't figure out about the fund pitches. They all promise consolidation and none of them explain where the supply comes from. If the holders behave like landowners, the deal flow is basically estates, divorces and owners who finally hit an infrastructure bill they can't fund. That's a real pipeline, it's just not a fast one, and a fund with a five year deployment window is competing hard for a thin slice.

tally, short version from someone with problems in progress: the catch is that the diligence is on undocumented physical systems, and the operating job needs a person on the ground who is genuinely hard to hire. Everything else in the pitch is true.

I voted infrastructure because it's the one that can wipe out a year and doesn't announce itself.