Guides

Mobile Home Park Investing

Mobile home park investing, more formally described as manufactured housing community investing, generally involves owning the land and shared infrastructure of a community while individual residents generally own their manufactured home outright and pay the park owner a monthly space or lot rent for the ground lease, utilities, and access to shared amenities. This ownership split generally shifts a meaningful share of the capital expenditure burden that a typical apartment landlord carries, since the park owner generally does not own or need to maintain the interior of each home, and turnover generally does not require the same interior renovation cycle an apartment unit would need between tenants. California manufactured home communities generally operate under the Mobilehome Residency Law, a distinct statutory framework from standard residential landlord-tenant law, which generally sets out specific rules for rent increase notice periods, park rule changes, and termination of tenancy that differ from AB 1482's apartment-focused rent cap and just cause framework, and many California jurisdictions, including some in the San Diego, CA area, generally layer additional local rent control ordinances specifically targeting mobile home parks on top of the statewide Mobilehome Residency Law. New manufactured housing community development is generally constrained in most established California markets, since zoning for this use is generally limited and the political and community dynamics around approving new mobile home park land use are generally difficult, which means existing, well located parks generally benefit from a scarcity of new competing supply that is uncommon in most other real estate asset classes. This supply constraint, combined with generally strong historical occupancy and payment stability since relocating a manufactured home is generally expensive and disruptive for a resident, has generally made existing mobile home parks a historically stable cash flow asset class for long term owners, even though the regulatory environment around rent increases and space rent setting requires careful compliance. San Diego, CA investors considering a mobile home park as a 1031 replacement property should generally review the specific local rent control ordinances that may apply, in addition to the statewide Mobilehome Residency Law, and should generally understand that a manufactured housing community, despite its lower capital expenditure profile compared to apartments, still generally requires careful compliance-focused management given the specialized regulatory framework. Educational content only. This is not tax, legal, or investment advice.