It’s not uncommon to have lots of different sizes, but sometimes park owners have to make hard choices on how best to use their smallest parcels. In this Mobile Home Park Mastery podcast we’re going to discuss the different options for small lots and come to some mathematical conclusions on their most profitable uses.
Episode 385: The Tiny Lot Playbook Transcript
Most mobile home parks are a mixture of lot sizes. Some streets will hold 76 foot long, three bedroom, two baths. Other streets may hold 56 foot lots which will hold a two bedroom, two bath. But then sometimes the lots are very, very small. And what do you do in those cases? This is Frank Rolfe with the Mobile Home Park Mastery podcast. We're going to talk about the tiny lot playbook. What to do with these little fractionally sized lots that many mobile home parks have and what are the best options for those, strictly from an economic perspective. Now, let me first remind everyone that clearly the greatest value for the customer out there is in fact the three bedroom, two bath mobile home.
That's the gold standard of the industry. And we wish that every lot could hold that. That would be the dream environment for any park owners, you don't even have to ask. When you're trying to fill vacant lots, you're just going to buy nothing but three bedroom, two bath and they're going to fly right off the rack because everyone loves owning the three bedroom, two bath. But when you have these lots that can't accommodate that gold standard feature, then you have to be a little creative. Because there are quite a few options, and you've got to make the right selection. Now, if I have a really small lot, and let's define a small lot, let's assume you have a lot that will only fit at the most a 14 by 36 foot mobile home. So the very first option you have on a lot that small is to put a one bedroom, one bath mobile home on it. And let me tell you right now, those are really hard to sell.
I've been trying to sell those things for 30 years on and off. Every time we bought a mobile home park that has small lots or comes with a one bedroom, one bath, I'm stuck right back in that rut. And it's very disheartening because everyone who comes to the mobile home park has the expectations of at least a two bedroom. They're hoping for the three bedroom, but nobody wants the one bedroom, one bath. Even people that were the one bedroom is the perfect option for them. Let's say you have a, an older single person, that one one is a great value for them, but they'll always say, no, I need the second bedroom. I need a place to use as an office or as some kind of bonus room to work on my hobbies or crafts or a guest bedroom.
And you can't really blame them because a one bedroom, one bath is kind of depressing. It's like living in a hotel room. So putting a small one bedroom, one bath on a mobile home lot, that doesn't seem that appealing to me. And then you have the option of putting in a park model. Again, it's a one bedroom, one bath, but they sometimes have a loft that comes with them. They're also known as tiny homes in some markets. But once again, the problem is it's not something most people are just dreaming of living in and they're very hard to sell. What makes park models even more difficult to sell is they're very expensive. So although in some markets a park model might be the best option, particularly if you have a property which is kind of a RV park mobile home hybrid. But once again, that probably is not going to be the best thing you can do. And then you can put in a small double wide that's very popular down in Florida. They've done a masterful job in Florida of devising little double wides to fit little mobile home park spaces and do a pretty good job.
So now in your little one bedroom, one bath, single wide lot, if you can fit the double wide, if you have the width, which many parks do, you can bring in a two bedroom, one bath, double wide. How do they do it? How do they get the extra bedroom and sometimes even a second bathroom in there? It's because there's no wasted space to hallways. It's a radial design. Everything flows off the living room. They're classy, they're neat. People love those little double wides. But the problem is they're really, really expensive. And that's why you find them traditionally a lot in Florida, where people have bigger budgets, I guess, to buy mobile homes. But in most markets that two bedroom, one bath or two bedroom, two bath double wide, that's going to be like a $80,000 unit. And that may just be impossible for you to sell. When you combine the cost of that for its size plus lot rent, it may be economically just not attractive to buyers. So again, that could be really hard. Now this next one is something that a lot of park owners do, and that's, hey, let's take that small lot and combine it with the small lot behind it.
And now we have one big lot. So now we're converting that little lot with addition of a second Lego lot into something that will hold the three bedroom, two bath. Now we can get our gold standard three bedroom, two bath, 76 footer on there. And for a lot of parks, that is the smart decision. But it depends on how you've on the front end budgeted for the park because you'll lose at least one lot every time you combine them. Can your budget handle that? Is that what you based your purchase price on? Or is that going to make your overall performance on this park unsuccessful? So be very careful on that. Also make sure if you want to combine the lots that you legally can combine them. Are there actual easements running between the lots that you can't have a home that hangs over? You have to check all those things out. Another option when you have that little lot is just to rent it to the neighbor.
That doesn't require buying a home, bringing in a home, utilities, anything. Just say, hey, you want a bigger yard? Here's the deal. I have this little vacant lot. I'll go ahead and rent it to you. You might be able to get 50 bucks a month, in some markets, maybe even $100 a month. It's no longer a vacant lot. Now it is occupied. But let's say your lot rent's 500 a month. Is that really going to work for you? What was your budget on that? Did you budget 500? I don't think 100 is going to maybe make that work. Another option is to convert that lot into an amenity. Now you might say, now what amenity would fit on that little 36 foot long lot?
Well, I mean, there's actually many. Number one, you could use it for overflow parking. In a lot of mobile home parks, parking is a very serious problem because the parks are built back in the '50s, the '60s, even the '70s, when most households had at the most two cars and many only had one car. And as a result, now when you have households that often have three cars, four cars, five cars, they got nowhere to park them. You can't have them park it in the yard. Looks terrible, creates big old muddy ruts. You can't always have them park on the streets because sometimes the streets aren't wide enough to accommodate that. So you can take that 36 foot lot and you can pave over that thing and that will give you four additional cars of parking. So that's a pretty important amenity. That may be enough to get several people in the parks parking problem solved.
You could even charge them for the use of that overflow parking if you wanted to try and monetize it. So that's an option. But what are you going to get for that? If I create four parking spaces, well, I could maybe charge them each $25 a car, but that's still not going to hit my budget. And then I have the additional cost of going in and paving it and all of that type of thing. But there's one other option floating around out there on the amenity side, and that's simply converting that little lot into something that everyone can use. Putting in picnic tables and a charcoal grill, just like a roadside stop on the highway system. And suddenly you have something that's of value to everyone in the park. You're not just serving the interest of a few people or one person by renting it to someone for a yard. Now the whole community can use the space, and you will be shocked how much you can pack into that little lot. On a little postage sized lot, 36 foot long and probably 30ft wide, that is going to allow you to have at least two or three picnic tables, probably at least two charcoal grills, and you may even end up with room for a small playground.
And now let's look at the economic impact of doing that. Let's assume that your mobile home park is approaching or has approached full market lot rent. Let's assume you have 50 spaces in there. Let's assume you don't really have any great common areas to speak of. Maybe you don't have any whatsoever. If you were to build this new little area that everyone can enjoy and that allows you to raise your rent $20 a month and say to people, look, we have this new value, this new amenity makes them happy, feeling like it's good value to them, on a 50 space park, that's $1,000 a month. So instead of just getting one lot rent, you're effectively getting two lot rents just by utilizing that as an amenity. So often for those little lots, the best thing you can do is not try and put a home on it, but simply make that something the entire community can use. And one more takeaway from all of this is there's no reason ever to not find a use for a small vacant lot. There's always something you can do productive for it, always some way you can typically monetize it.
But look at your park. Remember that every park is its own custom creation. Look at the demand, look at the demographics, and then you decide from that list which of those works the best for you. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.