How to Start a Mobile Home Park Fund

In a well-run community the fund collects lot rent and pays for roads, common areas, and often water and sewer. Turnover costs are minimal because the home belongs to the resident. That combination produces high operating margins and revenue that holds up in downturns, since the rent sits at the bottom of the housing market.

Because the model depends on raising lot rents toward market, LPs will ask what your policy is and what it assumes. State it in the strategy section: how far below market your acquisitions typically sit, the size and cadence of increases, and what vacancy or delinquency you assume follows. Funds that model a rapid march to market rent with no resident response get marked down, and the ones that get into public trouble are usually the ones that had no written policy at all.

Unlike an apartment building on a municipal grid, many manufactured housing communities own their water lines, sewer systems, septic fields, and roads outright. A failing septic system or a lead service line is a capital event the fund pays for, and diligence that skips a camera inspection of the sewer lines is not diligence.

Your acquisition checklist and your reserve policy should both reflect this. LPs increasingly ask what the fund sets aside per lot per year for infrastructure — commonly $100 to $300, and whether the model assumes conversion from private septic to municipal sewer — which can be transformative for value and expensive to execute.

Many acquisitions come with homes the seller owned and rented out. Those are not real estate — they are depreciating personal property, and renting them converts part of the fund into a landlord of houses with all the maintenance and turnover economics the land-lease model was supposed to avoid. Financing park-owned home sales to residents can also implicate consumer lending rules.

Most disciplined funds state a plan to convert park-owned homes to resident ownership over a defined period, and disclose the interim rental income separately so LPs can see how much of the yield depends on it. If your strategy deliberately keeps park-owned homes, say so and explain the economics rather than letting an LP discover it in the rent roll.

The Fund Builder models the economics — target raise, fee, preferred return, waterfall, leverage limits, hold period — so lot-rent growth and the distribution waterfall agree under questioning. Legal Canvas prepares the formation and offering documents with your lot-rent policy, reserve standard, and park-owned home plan carried as strategy disclosures for independent counsel review, and Scroll Deck builds the LP-facing deck from the same record.

For a strategy where the sensitive questions are operational rather than financial, having the policy stated identically in the deck, the model, and the offering documents is what keeps diligence short.