Selling A Mobile Home Park Terms: Three Ways To Get It Done Fast

Selling a mobile home park can seem impossible if you haven’t done your research and aren’t prepared. This article covers three ways you can receive money from a buyer for the sale of your mobile home park. These ways are commonly known as exit strategies or sale terms. 

This is not an article about how to find mobile home park brokers or how to get your park ready for sale.

Why are Sales Terms Significant?

If this is the first time you’ve been tasked with selling a mobile home park, you may not have put much thought into your exit strategy. But it’s important to do this because your asking price and the tax implications of the sale will be impacted by your terms.

The three standard sale term scenarios include: 1) selling the park for cash and walking away with a check; 2) financing the sale yourself and getting payments for the life of the loan, and 3) holding on to ownership of the park and signing a lease-with-option-to-buy agreement with a buyer.

Strategy #1: Sell for Cash

Selling for cash doesn’t mean literal money, as in walking away from the closing table with a suitcase full of Ben Franklins. 

It means that you are not carrying a note or financing the deal. Your buyer arrives at the closing table with financing arranged through a lender. You receive a check for the sale after all the closing paperwork has been signed. When the last signature is in place, and you have the check in hand, you’re officially free of your park, and someone else is the owner.

People choose this exit strategy when they want to get cleanly out of ownership, and they want a lump sum payment. 

If this option sounds good to you, remember that there are tax implications. The implications include potentially hefty capital gains tax and recapture tax. Your accountant can explain these taxes in full and help you understand how much you’ll owe if you get a lump-sum payment.

Lenders are not as willing to finance the sale of a mobile home park that is worth less than one million dollars or that contains rental units. Keep this in mind when setting your price. Your pool of buyers will be smaller, and you may have to lower your asking price because of that.

To sum up, if you’re considering selling your mobile home park for cash, remember that it may take a while to find a buyer who a) has the money in hand, or b) has found a lender willing to finance a park with rentals or with a value of less than $1 million. 

Strategy #2: Carry the Loan Yourself

When you carry the loan, this means you’re acting as a lender and providing financing. This is a great way to attract buyers and leverage your asking price.

When you carry the loan, the buyer makes regular payments to you, so you get to enjoy a passive income stream. (“Passive,” meaning you’re getting payments while doing no active work.) Don’t forget that this income is considered taxable, though.

If you don’t need to sell your mobile home park outright, this second strategy may be the right one for you.

Strategy #3: A Lease-Option Sale

A “lease option” is an arrangement where a potential buyer leases your mobile home park and makes regular payments to you.

At some point, he or she will have the option to buy the park, and the amount of the principal payments to that date will apply to the purchase price.

Lease-Option terms vary from park owner to park owner. Your accountant can help you figure out the best terms for your situation.

A Lease-Option sale has several benefits.

  • The lessee is responsible for all maintenance, upkeep, and repairs in the park (he or she receives all income from park residents)
  • If the park needs repairs and improvements at the time of the sale, you may not have to make these immediately. They can be written into the lease-option agreement as either the lessee’s responsibility or as the lessee’s task but funded by you, or another variation.
  • You, the park owner, are freed from day-to-day responsibilities of the park.
  • You receive a regular income from the lessee’s payments (the downside: it’s taxable).
  • Since a sale has not occurred, you don’t have to worry about capital gains taxes and recapture taxes.

Mobile Home Park Buyers Who Purchase for Cash

If you’d like to sell your trailer park for cash but don’t want the hassle of finding a retail buyer, there’s another option: sell the park to an investor. Houston Capital Home Buyers (HCHB) is an investor that purchases mobile home parks throughout the United States.

HCHB buys manufactured homes and trailer parks in their current condition for cash. We usually require one basic inspection to assess value and enable us to make a fair offer. No other inspections are necessary. 

HCHB has over a decade of experience in real estate investing and an A+ rating with the Better Business Bureau.

As you consider the three exit strategies for selling your mobile home park, if you want a cash buyer, contact us today. HCHB can make your sale happen as fast as you like. We’ll purchase your park, and you’ll leave the closing table with a check to take to the bank. Call us at the number at the top of this page.

Summing It Up

Want to get out from under ownership of your mobile home park? As you think about selling, also consider your exit strategy. Do you want a clean sale for cash? Are you in a position to offer owner financing? What about leasing your park and completing the sale down the road? 

Selling a mobile home park doesn’t have to be a nightmare. All three strategies have advantages and disadvantages. Decide what fits best for you and talk with your accountant. He or she will apprise you of the tax implications attached to each option, and those might clinch the decision.