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This is really the ‘terms’ part of a sale. The options that you choose will have a profound effect on the purchase price and tax implications associated with the sale of your park. I should also note that for parks that sell for under 1 million dollars, it is more difficult to secure financing compared to parks valued over a million. It is also difficult to secure financing for parks that are primarily rental parks. Rentals in parks create a second business model and are valued separately from the park itself. We have creative options if your park contains rental units, please fill out the form in the 'submit your park' section so we can discuss the option that best fits your exit strategy. Here is how we unpack these terms from both the seller and buyer point of views.


Cash sale- This basically means the buyer brings cash to the closing and the seller walks away from the closing with a cashier’s check or performs a 1031 exchange. The upside to the seller is they have cash in hand. The downside is there are tax implications including capital gains and recapture tax. This option tends to bring the lowest cash purchase price for a park. The terms for a cash sale are limited to conventional financing or the buyer having cash on hand to purchase the property. If your park is valued at under 1 million dollars or if the income is derived from park owned rental units this will be the most difficult option for a purchaser. Financing institutions have become gun shy to lending on parks with park owned rentals, leading to much higher interest rates or requiring the mobile homes titles to be purged before the sale. These realities do not work in the favor of the buyer or the seller. Creativity on the terms side of the sale is paramount if your community is smaller or a rental park.
Owner financing or Land Contract- This option creates an income stream from the sale of the park to the seller. There is typically interest and principal payments that allow for passive a income stream from your mobile home park investment. The upside to this option is the long term income from the sale of the park. In most cases there is not a significant income drop from park ownership to carrying the financing. This is a great option if you do not need the lump sum cash and current interest rates are triple those a bank gives in a checking account. The downside is the active income that is taxable at the personal income tax rate (interest charges). Your park will sell much faster and for a higher purchase price if you are open to this option. If your park has high vacancy, is valued at less than 1 million dollars or has a high ratio of park owned rental homes this option is one you really need to consider. Your purchase price will be better than if you only accept a cash sale.


Triple Net Lease with a Option To Purchase (NNN Lease Option)- This is another passive income stream selling option. This effectively delays the sale of your park. The buyer of the park becomes responsible for income and all of the expenses related to the park. This includes capital improvements. You receive a check every month from the buyer. You might consider this option if you do not want the capital gains hit. If your park is in need some work so it can be financed for a sale, we have the skill sets to preform the work, manage the community and exercise the option at a future time. We have also seen this used for estate planning purposes by placing the park into a trust for the benefit of the owner and then eventually the owner’s kids and grand-kids. These leases can be short term or very long term depending on the needs of the owner. Lease amounts can be adjusted periodically by tying the lease bumps to an economic indicator contained in the closest large metropolitan area. This might sound complex, but once in place these lease options can be a real 'win – win' for both the seller and buyer of the park. The downside to the owner is they continue to have ownership of the park so a relationship of trust must be built between the owner and lessee/buyer. The upside is this option is the best if the park has vacant spaces to be filled or other deferred maintenance issues. This option frees up our cash to infuse into the park, ultimately bringing the park to a standard the banks will finance the purchase. If you like the thought of continued income every month without the management duties this is a great option.
Partnership- In many cases we will consider the creation of a new partnership involving the original owner. We would bring in our management and implement our processes that have been found in successfully operating a mobile home community. With the operating agreement being different for every partnership concerning the day to day management and long term exit options, these are best unpacked after we determine the long and short term needs of everyone involved.

MHP Holdings, LLC.