One of the scariest type of parks are the “ghost towns” – a situation where you have a bunch of trailers that are completely abandoned. Above is a video I shot of one of these parks recently. A bunch of empty homes and no sign of humans anywhere. So what happened here? That’s the key question when you encounter the “ghost town” mobile home park.
What makes them unique in an already odd-ball industry?
You see a lot of strange things in old mobile home parks that are suffering from poor management, but it’s not that common to see one in which nearly all of the mobile homes have been completely abandoned. Typically, people are still living in them even if they are in poor condition – I’ve seen people living in old trailers with half their windows broken out. But when you have a situation in which the homes have no inhabitants at all, it’s clearly a sign of either a unique problem or a unique opportunity.
Good reasons for a park to be a “ghost town”
Of course there are some perfectly good reason for a park to take on a “ghost town” appearance that might represent a buying opportunity:
- Death or disability of the owner has led to complete absence of management. We’ve definitely seen this many times and have bought properties that were perfectly fine except that the owner had gone AWOL – typically due to a sudden illness or death. In those cases, there is often no succession plan and other family members have no idea what to do.
- Foreclosure by lender. Ditto on this one, as we have purchased properties in which the park is completely abandoned by the owner as foreclosure nears and the receiver does nothing but collect rent and let’s the property just sit without any marketing effort whatsoever, simply waiting for it to go to auction.
- A rash of abandoned homes that the seller does not know how to get possession of. Sometimes the seller simply has no idea of how to take possession of homes that residents have abandoned over the years, and just let’s them sit there. You can typically start the process to take possession of these homes with abandoned property auctions. Once you have control then it’s all about getting them renovated and occupied.
- Lack of titles in a state that requires them to rent or sell homes. In some states you cannot sell or rent a mobile home unless you are in possession of the title. As a result, it makes abandoned homes all the more difficult as it’s much harder to get a title than to take a home through an abandoned property auction. But a new owner can figure it all out.
- Good old-fashioned terrible manager with zero oversight. How many mobile home parks are a “ghost town” simply because the manager puts in zero effort to get homes renovated, marketed and sold? A huge number, unfortunately. However, that represents a great opportunity for a new owner who can simply fire the manager and the problem is solved.
Bad reasons for a park to be a “ghost town”
- Floodplain and the homes have been destroyed. Many mobile home parks have some or all of their lots in floodplain. If the water rises up to the floor of the home, then it’s basically destroyed. Sometimes a park has completely flooded, all the homes are worthless, and they just sit there rotting because everyone has given up hope. You can’t really buy that park because of the flooding issue, so it becomes just a field scattered with rotting homes filled with mold.
- Zero demand. We have always advocated that you should never buy a mobile home park unless you have conducted a test ad to measure demand. In the absence of demand you have no warm bodies to fill your vacant homes and ultimately the park becomes completely abandoned. You can’t fix this because there’s no demand for homes regardless of the owner.
- City refuses to issue permits. Some mayors, city managers and code enforcement officials decide to get that nasty “trailer park” out of their town by simply refusing to grant them permits to occupy their homes and lots. While this may be illegal, is the park really worth the legal cost to challenge it? And will the seller allow you to take that step in diligence?
- The park is – in fact – illegal. The other side of the equation stated above is when the park truly has no operating permit. Never did. The city finally shut it down. No hope to bring it back to life without a permit.
The bottom line is extremely good due diligence is essential
One thing is for sure: a “ghost town” park might be a great opportunity or a total catastrophe. Because it has such polar opposites, it’s essential that you view these deals as mandatory for extremely exhaustive due diligence. A smart buyer needs to accept that something big has occurred and they have to dissect whether or not they can cure the problem. When you buy a mobile home park that has stabilized occupancy, a sense of community, and signs of life everywhere, then you know that whatever your turnaround plan is you are already 80% of the way there. But when you buy a “ghost town” park it’s a heavy-life turnaround where you are basically buying just a bunch of parts you have to reassemble.
Conclusion
Just because a mobile home park is abandoned does not mean that you cannot make it a massive success. But it may also represent the worst decision of all time. The difference between the two can be found through strong due diligence. If you need help in understanding each and every item that needs analysis and how to perform it, then visit out website at MHU.com. If you trust your knowledge you can trust your decisions.
Beware of “Ghost Town” Parks - Transcript
This is a "ghost town" mobile home park. Sitting there along a highway. Over 100 Lots, little clubhouse. Used to be a nice place, probably. The big question is, why is it a ghost town? And what does that mean? A ghost town park can be a wonderful buy, if it has all the basic necessities to be brought back to life, or it can be pretty much the most disastrous investment you could humanly make.
In this article, we're going to address the different factors that can make a ghost town park, a thing that should be avoided. And contrast that with those elements that make a ghost town park, a very successful investment indeed. You see these kinds of parks frequently throughout the United States. What's important and when you spot them is; to put on your white lab code and get down to business to figure out why is this park so empty, and can it be successfully brought back to life?