Owning 20 mobile home park lots directly versus being an LP in 120

Question

For an investor coming from small multifamily and drawn to the land-lease model, the choice usually comes down to two doors. Door one: buy a small park directly, something like 20 to 25 lots, all tenant-owned homes, in a rural county within driving distance, priced perhaps $400k to $600k. The owner holds the land, roads, and buried infrastructure, and collects lot rent from residents who own their own houses. There is no water heater to fix, but there is meter reading, chasing arrears, and deciding what happens when a home gets abandoned. Door two: put the same capital into a fund or single-asset syndication holding 120 lots or more, professionally managed, with quarterly distributions and no phone calls, learning from the reports and by asking questions rather than from the potholes directly. The case for door one is that a 20-lot park is a genuine education and the owner keeps all of the upside, and small parks are where fragmented ownership actually sits in this asset class. The case for door two is that a 20-lot park has no economies of scale, one bad septic year can consume the entire year's cash flow, and the operational expertise this asset class needs is something an owner is generally expected to already have rather than learn on the job. Both are defensible. The honest answer usually depends on how much operational risk an investor is prepared to hold directly versus delegate for a smoother, more diversified return.

luis_carrera · Answer

Voted own it, mostly because operating a park teaches things that analysis never will. But 20 lots is the number that worries me. At $300 lot rent that's $72,000 gross and maybe $45,000 net, and a single well pump or a 200-foot main repair is a year of it. If you're going to own, own 35 and up so the fixed costs spread.

devon_pierce · Answer

Look at enough 20 to 40 lot parks and the pattern is that the small ones almost never have clean books. The owner is 74, runs it out of a checkbook, has three tenants paying cash and one paying in mowing. That is the opportunity and it is also the risk, and there is no diligencing your way out of it entirely.

karen_whitfield · Answer

Own it. You already know how to run something small and the whole point of the land-lease model is that the expensive stuff isn't yours. On my long holds the lesson has been that patience only pays if you actually control the asset. An LP position teaches you what a sponsor chooses to tell you, quarterly, in a letter they wrote.

ehernandez74 · Answer

Before you pick a door, one question decides more than the door does. Are the utilities inside that 20-lot park public and metered to residents, or is there a well, a septic field or a master meter? A 20-lot park on city water and sewer with meters in tenant names is close to owning a parking lot that pays you. A 20-lot park with its own well and a drain field is a small utility company with a housing hobby attached, and it needs a licensed operator in most states. Same lot count, completely different job.

jessreyes12 · Answer

Dumb question that I'd want answered before either door. If a resident owns their home and stops paying lot rent, what actually happens? Do you evict the person and the house stays there, and then whose house is it? That process seems like the entire risk of the model and I've never seen anyone explain it in plain terms.

brandonlee36 · Answer

For @jessreyes12, what it comes down to is that you are evicting from the lot, and the home stays put because moving it costs thousands. What happens to the home after that runs through your state's abandoned mobile home process, which varies a lot state to state and can take months, and you generally need a lawyer for it. That gap is where small owners get hurt. You hold a lot you cannot rent with a home on it you do not have title to. For @renee_dubois, on the poll the answer is LP, and the reason is that the thing that breaks at scale for a small owner is their own time. Twenty lots two hours away with one abandonment in progress is a second job that pays about $40k.

priya_n21 · Answer

LP is the answer for anyone whose whole aim is avoiding the second job. The less flattering reason many people land there is that they do not want to be the person deciding whether to raise lot rent on someone's grandmother.

tashaford30 · Answer

I voted own it and I want to push back on @brandonlee36 a little. One abandonment in the first two years is a fair assumption, and you learn the process once and then you know it. The LP path has a version of the same problem where you learn nothing and cannot sell your position when you want out. Illiquidity plus no control is a real cost that the quarterly distribution hides.

bmoreno23 · Answer

Coming from zero I looked at both and what surprised me is how few small parks are actually listed. If you go the own-it route you're doing direct outreach for months first, which is its own project. The LP door is open today. That's not an argument about quality, it's an argument about timeline.

nicole_adeyemi · Answer

One thing to check on door one before anything else: is the park a legal nonconforming use, and does the local zoning let you replace a home on a vacant lot? There are small parks where the ordinance was rewritten in, say, 1996 and the park is grandfathered as-is, so every lot that goes empty stays empty forever. That turns a 20-lot park into a shrinking annuity and no amount of good operating fixes it. Zoning language differs by jurisdiction, so read the actual ordinance and ask the planner in writing.

Owning 20 mobile home park lots directly versus being an LP in 120

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