Mobile Home Park

Mobile Home Park (Manufactured Housing Community)

In the context of commercial mortgages, a Mobile Home Park (MHP)—frequently referred to by institutional lenders as a Manufactured Housing Community (MHC)—is a specialized type of income-producing commercial real estate. It consists of a parcel of land that has been improved with infrastructure and divided into individual "pads" or lots. These lots are leased to residents who typically own their own manufactured homes and pay a monthly "lot rent" to the park owner for the use of the land and access to utilities.

From a commercial lending perspective, Mobile Home Parks are highly regarded for their recession-resistant qualities and consistent cash flow. Unlike traditional multifamily apartments where the landlord owns both the land and the structure, the primary value of an MHP investment lies in the land, the utility connections, and the long-term nature of the tenancy.

Detailed Description and Characteristics

When underwriting a commercial mortgage for a Mobile Home Park, lenders focus on several specific operational and physical characteristics that distinguish this asset class from other real estate types:

• Tenant-Owned Homes (TOH) vs. Park-Owned Homes (POH): Lenders prefer communities with a high percentage of Tenant-Owned Homes. In this model, the tenant is responsible for the maintenance of the structure, which significantly lowers the owner’s operating expenses. Parks with a high number of Park-Owned Homes are often viewed as higher risk and may be underwritten similarly to apartments.
• Utility Infrastructure: A critical component of the MHP description is how utilities are managed. Parks may be on city water and sewer or private systems (such as septic tanks or well water). Commercial lenders generally offer more favorable terms to parks on municipal services due to the lower risk of environmental failure or costly repairs.
• Density and Pad Count: The "unit count" in an MHP is measured by the number of developed pads. Lenders evaluate the density (pads per acre) and the physical condition of the roads, electrical pedestals, and skirting of the homes.
• Occupancy and Stability: MHPs typically boast the lowest turnover rates in the housing industry. Because it is expensive and difficult to move a modern manufactured home, tenants tend to remain in place for decades, providing a stable income stream that is attractive for long-term financing.
• Amenities and Management: Professional MHPs often include communal features such as clubhouses, playgrounds, and swimming pools. Lenders assess the quality of on-site management to ensure the park is maintained according to local health and safety regulations.

Commercial Mortgage Considerations

Because MHPs are categorized as special-purpose properties, they have access to unique financing vehicles. This includes Agency Lending (Fannie Mae and Freddie Mac), CMBS (Commercial Mortgage-Backed Securities), and traditional bank balance sheet loans. Underwriters will closely examine the Net Operating Income (NOI), the age of the homes within the community, and the ratio of single-wide to double-wide units when determining the loan-to-value (LTV) ratio and interest rate.