[DSCR](/blog/what-is-dscr-ratio) Loan for Mobile Home Parks: Finance MHP Investments

Mobile home parks (MHPs), also known as manufactured housing communities, represent one of the most recession-resistant and cash-flow-positive niches in [real estate investing](/blog/brrrr-strategy-guide). With affordable housing shortages nationwide and mobile homes offering attainable homeownership, well-managed MHPs deliver exceptional returns. DSCR (Debt Service Coverage Ratio) loans have emerged as a practical financing solution for smaller mobile home parks, allowing investors to qualify based on the property's lot rental income rather than personal tax returns.

Understanding Mobile Home Park Investments

Mobile home parks consist of developed lots with infrastructure (utilities, roads, common areas) where residents place manufactured homes. The business model differs fundamentally from traditional real estate:

Park-Owned Homes (POH) vs. Tenant-Owned Homes (TOH)

Tenant-Owned Homes (Preferred Model):

• Residents own their mobile homes
• Park owner rents only the land/lot
• Tenants responsible for home maintenance
• Lower landlord involvement
• Higher tenant retention (moving a mobile home costs $5,000-15,000)

Park-Owned Homes:

• Park owns mobile homes and rents them to tenants
• Higher income per lot
• Landlord responsible for home maintenance and repairs
• More operational complexity
• Higher turnover risk

DSCR Preference: Lenders typically prefer parks with majority TOH (70%+ tenant-owned) due to lower landlord maintenance obligations and stronger tenant retention.

Mobile Home Park Income Model

Primary Income:

• Lot rent ($250-800/month depending on location and amenities)
• Multiplied by number of occupied lots
• Example: 50 lots × $450/month = $22,500 monthly income

Additional Income Streams:

• Utilities (water/sewer markup if park provides)
• Late fees
• Pet fees
• Storage rentals
• Laundry facilities
• RV/boat storage
• Billboard or cell tower leases

Why Mobile Home Parks Excel as Investments

1. High Tenant Retention:

• Moving a mobile home is expensive and difficult
• Residents effectively "trapped" economically
• Average tenancy: 10-14 years (vs. 2-3 years for apartments)

2. Affordable Housing Demand:

• Mobile homes provide homeownership at 1/3 the cost of traditional homes
• Strong demand from working-class families, retirees, fixed-income residents
• Limited new mobile home park development (restrictive zoning)

3. Recession-Resistant:

• During economic downturns, residents trade down from apartments to mobile home parks
• Occupancy often remains stable or increases during recessions

4. Low Operating Expenses:

• No roof or HVAC maintenance (if TOH model)
• Minimal common area maintenance
• Low management costs (1 manager per 100+ lots typical)

5. Scalable Income:

• Lot rents can increase annually
• Add amenities (playground, clubhouse) to justify higher rents
• Fill vacant lots with used or new homes

[DSCR Loan Requirements](/blog/dscr-loan-documentation-checklist) for Mobile Home Parks

Property Size and Price

[DSCR loans](/blog/dscr-loan-guide) work best for:

• Smaller parks: 20-75 lots
• Purchase price: $500K-$3M typically
• Larger parks (75+ lots): Often require commercial financing

Credit Score

• Minimum: 660-680
• Preferred: 700-720
• Excellent: 740+

Mobile home parks may require higher credit scores than residential rentals due to specialized nature and operational complexity.

Down Payment

• Standard: 25-30%
• First-Time MHP Investor: 30-35%
• Parks Needing Improvements: 30-35%
• Experienced MHP Operator: May negotiate 25%

Cash Reserves

Mobile home parks require robust reserves due to:

• Infrastructure repairs (roads, utilities)
• Fill-in opportunities (purchasing homes for vacant lots)
• Potential for major utility system repairs

Typical Requirement: 12-18 months of PITIA plus operating reserves

Occupancy Requirements

Most lenders require:

• Minimum occupancy: 70-80% of lots occupied
• Stabilized operations: 12+ months of consistent rent collection
• No major deferred maintenance

Parks below 70% occupancy may require larger down payments or [bridge financing](/blog/bridge-loan-guide) to fill vacant lots before permanent DSCR financing.

Property Standards

Infrastructure Condition:

• Roads in good repair
• Water/sewer systems functional (private systems must be permitted and compliant)
• Electrical infrastructure adequate
• Proper drainage

Regulatory Compliance:

• All required permits and licenses current
• No outstanding code violations
• Environmental compliance (especially septic/water systems)
• Zoning permits manufactured housing use

Title and Legal:

• Clear title
• No unresolved liens
• Easements for utilities documented
• Survey showing lot boundaries

Calculating DSCR for Mobile Home Parks

Income Calculation

Lot Rent Income:

• Number of occupied lots × monthly lot rent
• Example: 45 occupied lots × $475/month = $21,375/month

Park-Owned Home Rent (if applicable):

• POH units × monthly rent
• Example: 5 POH units × $850/month = $4,250/month

Ancillary Income:

• Water/sewer fees: $1,500/month
• Late fees: $200/month
• Pet fees: $300/month
• Storage: $400/month

Total Monthly Income: $28,025

Annual Income: $336,300

Expense Considerations

Typical Operating Expenses (TOH Park):

• Property taxes: 8-12% of income
• Insurance: 3-5% of income
• Utilities (common areas): 3-5% of income
• Maintenance and repairs: 5-8% of income
• Property management: 5-10% of income
• Administrative: 2-4% of income

Total Operating Expenses: Typically 35-50% of gross income for well-run TOH parks

POH parks: 55-65% operating expense ratios due to home maintenance responsibilities

Example DSCR Calculation

50-Lot Park (45 occupied, 90% occupancy):

Annual Income: $336,300 (calculated above)

Operating Expenses (40%): $134,520

Net Operating Income (NOI): $201,780

Purchase Price: $1,600,000 Down Payment (30%): $480,000 Loan Amount: $1,120,000 Interest Rate: 8.5% Annual Debt Service: $102,144

DSCR Calculation: $201,780 / $102,144 = 1.98 DSCR ✓ Excellent

Note: Some DSCR lenders use gross income approach rather than NOI. Verify methodology with your lender.

Strategic Mobile Home Park Investment Approaches

Strategy 1: Stabilized Park Acquisition

Profile:

• 80-95% occupancy
• Tenant-owned homes (majority)
• Good infrastructure condition
• Professional management in place

Advantages:

• Immediate cash flow
• Lower risk
• Easier financing approval
• Passive ownership possible

Typical Returns: 8-12% cap rates in decent markets

Best For: First-time MHP investors, passive investors

Strategy 2: Value-Add Turnaround

Profile:

• 60-75% occupancy
• Deferred maintenance
• Below-market rents
• Mom-and-pop ownership (poor management)

Value Creation Tactics:

• Fill vacant lots with used/new homes
• Raise rents to market rates over 2-3 years
• Improve infrastructure (roads, landscaping)
• Implement professional management
• Add amenities

Typical Returns: 15-25% IRR through forced appreciation

DSCR Financing: May require initial bridge financing, then refinance with DSCR after stabilization

Best For: Experienced investors comfortable with operational challenges

Strategy 3: Master-Metered Utility Conversion

Opportunity: Many older parks provide water/sewer with no separate billing (included in lot rent).

Conversion Process:

• Install individual meters for each lot
• Bill residents separately for actual usage
• Increase lot rent modestly while reducing overall tenant costs (residents conserve water when billed directly)

Benefits:

• Reduces park operating expenses (water/sewer often 8-15% of expenses)
• Improves NOI and property value
• Residents conserve, reducing infrastructure strain

Cost: $15,000-40,000 for 50-lot park

ROI: 25-40% cap rate on improvement cost

Strategy 4: Infill Development

Opportunity: Parks with excess land can add lots.

Process:

• Survey shows potential for additional lots
• Develop infrastructure (utilities, roads, pads)
• Add lots and market to mobile home buyers
• Increase park income and value

Cost: $8,000-15,000 per new lot (infrastructure)

Return: New lot generates $400-600/month income = $4,800-7,200/year

Cap Rate on Improvement: At 10% cap rate, each new lot adds $48,000-72,000 in property value

Market Selection for Mobile Home Park Investments

Ideal Markets

Strong MHP Markets:

• Growing Sunbelt states (Texas, Florida, Arizona, Carolinas)
• Areas with affordable housing shortages
• Blue-collar employment bases (manufacturing, distribution, healthcare)
• Retirement-friendly climates (affordable retiree housing)
• Military bases nearby (enlisted personnel seek affordable housing)

Characteristics:

• Population growth
• Job growth (even low-wage jobs support MHP demand)
• Limited new park development (zoning restrictions)
• Home prices 3x+ median income (making mobile homes attractive alternative)

Markets to Approach Cautiously

Challenging Factors:

• Declining population
• Economic dependence on single struggling industry
• High property taxes (erode cash flow)
• Hostile mobile home park regulations
• Abundant new apartment development (competing affordable housing)

Location Within Market

Preferred Locations:

• 5-15 miles from employment centers (not too remote, not too urban)
• Near major highways for commuter access
• Safe, working-class neighborhoods
• Adequate shopping and services nearby

Avoid:

• Flood zones
• High-crime areas
• Locations with pending adverse development (landfills, industrial)
• Areas with restrictive mobile home park ordinances

Operational Considerations

Property Management Models

Self-Management:

• Suitable for smaller parks (20-40 lots) within 30 minutes of your home
• Lower costs
• Direct tenant relationships
• Requires time commitment

On-Site Manager:

• Manager lives in park (often receives free lot rent + salary)
• Handles day-to-day issues
• Collects rent and handles maintenance coordination
• Typical cost: $1,500-2,500/month total compensation

Third-Party Management:

• Professional MHP management companies
• Handle all operations
• Cost: 8-12% of gross income
• Best for remote owners or multiple properties

Common Operational Challenges

Challenge 1: Tenant Conflicts

• Mobile home parks are communities; conflicts arise
• Noise complaints, pet issues, parking disputes

Solution: Clear park rules, consistent enforcement, professional communication

Challenge 2: Delinquent Lot Rent

• Some residents struggle financially
• Evicting means potentially abandoned home on your lot

Solution: Strict rent collection policies, late fees, prompt eviction process, screen tenants carefully

Challenge 3: Abandoned Homes

• Residents occasionally abandon homes (can't afford to move or dispose of them)
• You inherit an asset (the home) and liability (removal cost $2,000-6,000)

Solution: Title homes if residents abandon, refurbish and sell or rent, maintain reserves for removal if necessary

Challenge 4: Infrastructure Failures

• Water line breaks, sewer backups, road deterioration
• Can be expensive ($10,000-50,000 for major repairs)

Solution: Inspect infrastructure thoroughly before purchase, maintain 18-24 month reserves, budget for capital improvements

Challenge 5: Regulatory Compliance

• Mobile home parks are regulated at state and local levels
• Health department oversight of water/sewer systems
• Occupancy limits and safety standards

Solution: Understand regulations before purchasing, budget for compliance costs, maintain good relationships with local officials

Due Diligence for Mobile Home Park Acquisitions

Financial Analysis

Request from Seller:

• 3 years of profit/loss statements
• Current rent roll (every lot, rent amount, tenant name)
• Utility bills (especially water/sewer)
• Property tax bills
• Insurance costs
• Maintenance and repair records

Verify:

• Physical occupancy (drive through and count occupied lots)
• Delinquency rates (how many tenants are behind on rent?)
• Rent collection (review bank deposits vs. reported income)
• Hidden expenses (are there unreported costs?)

Physical Inspection

Infrastructure:

• Roads: Pavement condition, potholes, drainage
• Water system: Private well or city water? Age and condition? Adequate pressure?
• Sewer: City sewer, private treatment plant, or septic systems? Compliance and condition?
• Electrical: Individual meters? Panel capacity? Code compliance?
• Common areas: Clubhouse, playground, laundry—condition and usage

Individual Lots:

• Count total lots (developed vs. undeveloped)
• Verify which lots are occupied
• Check home ownership (are homes tenant-owned or park-owned?)
• Assess vacant lot condition (ready to rent or need work?)

Legal and Regulatory

Title Review:

• Clear title
• Easements for utilities
• Survey showing lot boundaries
• No undisclosed liens

Permits and Licenses:

• Mobile home park license/permit (required in most states)
• Water system permits (if private well/treatment)
• Septic permits (if applicable)
• Business license

Zoning:

• Property zoned for manufactured housing
• Number of allowed lots matches actual developed lots
• No pending zoning changes
• Expansion possibilities (can you add lots?)

Park Rules and Regulations:

• Review existing park rules
• Check for problematic rules that might require changes
• Verify rules comply with state/local landlord-tenant law

Environmental Concerns

Potential Issues:

• Underground storage tanks (heating oil, propane)
• Septic systems (potential soil contamination)
• Asbestos in older buildings
• Lead-based paint
• Well water contamination

Recommendation: Phase I Environmental Site Assessment for any park with private water/sewer systems or prior commercial/industrial use on site.

Improving Mobile Home Park Performance

Tactic 1: Rent Increases

Most mom-and-pop owners undercharge:

• Research market rents for comparable parks
• Implement annual increases (3-5% typical, or $15-25/month)
• Grandfather existing tenants with smaller increases, charge market rate for new tenants

Impact Example:

• 50 lots × $25/month increase = $1,250/month = $15,000/year
• At 10% cap rate, property value increases $150,000

Tactic 2: Fill Vacant Lots

Strategies:

• Purchase used mobile homes ($5,000-15,000), refurbish, sell to buyers who will rent the lot
• Partner with mobile home dealers to bring homes to park
• Offer move-in incentives (first month free, waived deposit)
• Finance home sales to qualified buyers

Impact Example:

• Fill 5 vacant lots at $450/month each
• Income increase: $2,250/month = $27,000/year
• At 10% cap rate, value increase: $270,000
• Investment: ~$50,000 for 5 used homes and refurbishment
• ROI: $220,000 net value creation

Tactic 3: Bill-Back Utilities

Convert master-metered utilities to individual billing:

• Reduces operating expenses by 8-15%
• Incentivizes resident conservation
• Improves NOI

Example:

• Park pays $6,000/month for water/sewer
• Install meters, bill residents directly
• Park expense reduces to $500/month (common area only)
• NOI improvement: $5,500/month = $66,000/year
• Value increase (10% cap): $660,000
• Investment: $30,000 for meters and installation
• Net value created: $630,000

Tactic 4: Add Amenities and Improve Appearance

Curb Appeal:

• Landscaping and entrance improvements
• Fresh road striping and signage
• Community playground or picnic area
• Dog park

Operational Improvements:

• Online rent payment
• Professional [property management software](/blog/best-property-management-software-2026)
• Resident communications (newsletters, events)

Result: Justify higher rents, reduce turnover, attract better-quality residents

Tactic 5: Reduce Operating Expenses

Cost Cutting:

• Shop insurance (mobile home park insurance varies widely)
• LED lighting in common areas (reduce electric bills)
• Negotiate trash service
• Eliminate unnecessary services
• DIY minor maintenance

Financing Challenges and Solutions

Challenge 1: Limited DSCR Lender Familiarity

Problem: Many DSCR lenders focus on residential rentals; mobile home parks are unfamiliar territory.

Solution:

• Work with lenders experienced in commercial/specialty properties
• Provide education on MHP business model
• Share operating statements and market data
• Demonstrate strong DSCR (1.4-2.0 is common for well-run parks)

Challenge 2: Environmental and Infrastructure Concerns

Problem: Lenders worry about costly water/sewer system failures or environmental liabilities.

Solution:

• Conduct Phase I ESA upfront
• Provide detailed infrastructure inspection reports
• Show history of maintenance and regulatory compliance
• Maintain strong reserves (18-24 months)

Challenge 3: Appraisal Challenges

Problem: Appraisers may struggle with limited MHP comparable sales.

Solution:

• Provide appraiser with comparable park sales data
• Accept income-approach valuation (cap rate methodology)
• Understand appraisals may be conservative
• Work with appraisers experienced in commercial/MHP properties

Challenge 4: Higher Interest Rates

Problem: Specialty properties carry rate premiums (0.5-1.5% higher than standard residential).

Solution:

• Accept higher rates as cost of entering high-return niche
• Shop multiple lenders for competitive rates
• Refinance after 2-3 years of strong performance
• Focus on cash-on-cash returns (even at higher rates, MHPs often deliver 12-20% returns)

Tax Advantages of Mobile Home Park Ownership

Depreciation

• Land: Not depreciable (often 20-30% of purchase price in MHPs)
• Infrastructure and improvements: 15-year depreciation (roads, utilities)
• Buildings (clubhouse, office): 39-year depreciation
• Park-owned homes: 27.5-year depreciation

[Cost Segregation](/blog/depreciation-real-estate-guide)

Accelerate depreciation by reclassifying components:

• Sidewalks, landscaping, signage: 15 years
• Electrical distribution, water lines: 15 years
• Equipment and furnishings: 5-7 years

Benefit: Front-load depreciation deductions, significantly reducing taxable income in early years.

Operating Expense Deductions

All ordinary and necessary expenses:

• Property management
• Maintenance and repairs
• Utilities
• Insurance
• Property taxes
• Marketing and advertising
• Professional fees
• Vehicle expenses (if used for park management)

1031 Exchange Opportunities

[Defer capital gains](/blog/1031-exchange-vs-opportunity-zones) by exchanging into larger parks or other investment properties:

• Sell 40-lot park, purchase 80-lot park
• Defer all capital gains taxes
• Continue scaling portfolio tax-deferred

Common Mobile Home Park Investment Mistakes

Mistake 1: Buying a POH Park as First Investment

Error: Purchasing park where you own most mobile homes.

Reality: Managing 40 mobile homes plus the land is complex and maintenance-intensive. Better to own land only (TOH model).

Solution: Start with parks that are 70%+ tenant-owned homes.

Mistake 2: Underestimating Infrastructure Costs

Error: Failing to inspect or budget for water/sewer system repairs.

Reality: Replacing water mains or sewer lines can cost $100,000-300,000+ for a 50-lot park.

Solution: Hire specialized MHP inspector, conduct sewer scope and water pressure tests, maintain robust reserves.

Mistake 3: Ignoring Local Regulations

Error: Purchasing without understanding local MHP ordinances.

Reality: Some cities have rent control, strict eviction procedures, or are attempting to phase out mobile home parks.

Solution: Research local laws thoroughly, speak with city planning department, join state MHP association.

Mistake 4: Overestimating Rent Increase Potential

Error: Assuming you can immediately raise rents 30-50% to market rates.

Reality: Drastic increases cause resident flight and instability. Gradual increases over 2-3 years are more sustainable.

Solution: Implement modest annual increases (5-8%), invest in improvements to justify increases, grandfather existing tenants at slower increase rates.

Mistake 5: Poor Tenant Screening

Error: Approving all applicants to fill vacant lots quickly.

Reality: Problem tenants create issues for years (non-payment, rules violations, conflicts with other residents).

Solution: Implement rigorous screening (credit check, references, criminal background, prior landlord verification), maintain standards even when eager to fill vacancies.

Related Articles

• DSCR Loan for Industrial Properties: Finance Warehouses and Manufacturing Spaces
• DSCR Loan for Mixed-Use Properties: Finance Commercial and Residential Buildings
• Dscr Loan For Self Storage
• Dscr Loan For Senior Living
• Dscr Loan For Short Term Rentals

Frequently Asked Questions

Can I get a DSCR loan for a mobile home park with less than 70% occupancy?

It's challenging. Most lenders want 70-80%+ occupancy. Parks below this threshold may require larger down payments (35-40%), bridge financing to fill lots, or cash purchase followed by DSCR refinance after stabilization.

Do DSCR lenders finance parks with private water/sewer systems?

Yes, but they'll require evidence of regulatory compliance, system condition reports, and potentially environmental assessments. Parks on city water/sewer are easier to finance.

Can I finance a mobile home park in an LLC?

Absolutely. LLC ownership is recommended for liability protection, and DSCR loans accommodate entity ownership.

What if the park has park-owned homes?

DSCR lenders will finance parks with some POH units, but prefer majority TOH. Parks with 60%+ POH may face challenges or require commercial financing.

How do lenders verify occupancy?

Through rent rolls (list of all tenants and rents), physical inspection during appraisal, utility connection data, and historical income verification (bank statements).

Can I convert an RV park to a mobile home park with DSCR financing?

Conversion projects typically require construction/renovation financing. After conversion and stabilization, you could refinance with DSCR. Verify zoning permits manufactured housing before attempting conversion.

What interest rates should I expect?

As of 2026, mobile home park DSCR loans range from 8.0-10.0% depending on credit score, DSCR ratio, down payment, park quality, and occupancy. Specialty properties carry premiums over standard residential.

Are there portfolio limits for mobile home park DSCR loans?

Generally no. DSCR lenders typically allow unlimited properties, enabling you to scale a mobile home park portfolio.

How important is management experience?

While DSCR loans don't require operational experience for approval, practical success demands understanding MHP operations. Consider partnering with experienced operators or hiring professional management initially.

What happens if a major infrastructure failure occurs?

You're responsible for repairs regardless of cost. This is why maintaining 18-24 months of reserves plus capital improvement budgets is critical. Consider infrastructure inspections before purchase and budgeting 3-5% of income annually for capital reserves.

Conclusion

Mobile home parks offer exceptional investment opportunities for those willing to embrace operational complexity and understand the unique dynamics of manufactured housing communities. With high tenant retention, strong cash flow, limited new supply, and secular affordable housing demand, well-selected MHPs deliver returns that few other real estate asset classes can match.

DSCR loans make mobile home park investing accessible to investors who might not qualify for traditional commercial financing, focusing approval on the property's income performance rather than personal tax returns. While MHPs require thorough due diligence—particularly regarding infrastructure, regulations, and market dynamics—the rewards justify the effort for investors committed to this niche.

Ready to explore mobile home park financing with a DSCR loan? HonestCasa works with investors on specialty property types including manufactured housing communities. Contact our team to discuss your mobile home park investment strategy and explore your financing options.