Have you ever known something to be true, only to find others don’t believe it? As investors, we sometimes get that feeling—an almost evangelical conviction in a deal. This conviction can be the fire that lights your path to success or the same fire that burns down your reputation and others’ money with it. Often, we chase deals so persistently that when we finally find one, we’re determined to make it work—even if it doesn’t. We can become blind to the risks and issues in the deal. When someone tries to point them out, we’re likely to brush them off, convinced “they don’t understand,” and continue down the road, blissfully unaware of what they tried to tell us. It can be hard to tell the difference between conviction and blind faith.
This topic came to mind because I recently contracted a 188-lot park and faced a situation I think many operators encounter at some point in their careers.
Now, I didn’t just jump into this deal lightly. Up until this point, I had reviewed 35 to 40 different communities sent over by brokers, wholesalers, and sellers. This one landed on my desk over an unrelated phone call, and it checked all my boxes. The price left me room to cover what I needed to turn it around. So, I pulled the trigger, got it under contract, and felt that familiar fire. I moved forward with due diligence, sifting through financials, property records, and city information, and finally went on my initial site visit. I’d be lying if I said due diligence didn’t turn up any red flags—it did, a few of them. But these were issues I’d anticipated and set aside reserves for. The unexpected, the unplanned—that’s part of the process.
Then came the next step: finding potential partners. With my initial findings and projections, I started reaching out. I was met with good reception from many, but one response made me pause. Was my conviction leading me astray? Was it blind faith? I had only mentioned that I had a 188-lot park in a specific location, but before I could go further, he identified the community and said he’d personally passed on it earlier this year. My heart sank, and questions raced through my head—why had he passed? This was a unicorn, the kind of deal everyone wants. He pointed out to me it raised concerns with him on the Market it was in and a loss in population over the last 4 years. He futher stated he thought because 30% of the park was vacant , infill would be expensive and difficult. Then the cherry on top, he thought the seller and manager of the park would be difficult to work with and the park was being severely mismanaged.
Honestly, I couldn’t disagree with him on any of these points, and I told him so. He wasn’t wrong. In fact, he was right, and each of these concerns had crossed my mind. But he passed, and I didn’t. Why? Who was right?
It was a blow. Even though he’d only pointed out what I already knew, I’d hoped for a pat on the back, not a rejection. This experience made me want to break down the critical thinking and logic I used in this scenario, to examine whether my conviction was righteous or misguided.
First Principles Thinking in Mobile Home Park Investing
In the investment world, we often hear operators talk about their “buy box”—the perfect property checklist. They list all the elements they don’t want to touch. Yet, every day we see communities for sale that don’t fit any ideal mold. Someone’s buying them, so who are they, and why?
Before we dive in I will point out the obvious, some of those are bought and turnaround and I am aware some are bought blindly by misguided investors who end up losing. Which again raises the question, how do you know which one is true in a given scenario? Using a buy box as a guide can be helpful, but I’ve found that relying on it alone can lead you astray. Instead, I apply a critical thinking framework called First Principles. I’ve also created my own extensions, which I call Second and Third Principles, to guide my investing decisions.
First Principles thinking is about breaking down a problem into its fundamental truths, disregarding conventional wisdom, and reassembling it from the ground up. Instead of following what the “experts” say, you start with what you know to be true and reason from there. By identifying these core elements, you can make decisions unbounded by others’ beliefs or assumptions.
To begin, you identify and understand the fundamental principles of the problem or situation. Rather than relying on analogies or conventional wisdom from industry pundits, First Principles thinking encourages you to start with what you know to be true and reason forward from there. By dissecting problems into their most basic, self-evident truths, you can build solutions or insights that aren’t limited by prevailing beliefs or assumptions.
In this case, the industry tells us not to buy a park with a lot of infill needs, a major turnaround, or one in a declining population area. They warn against private utilities, rural locations, parks below 50% occupancy, or those with a high percentage of park-owned homes, and don’t buy below “x” Cap Rate. These are common assumptions, but I challenge them by asking myself: What do I know for sure? What are the basic building blocks of this investment?
Building on First Principles, I’ve developed Second and Third Principles. While First Principles get to the deal’s core objective merits, these additional principles evaluate if the deal aligns with my resources, capabilities, and strategic goals.
I break down First Principles into four categories: Feasibility, Location, Condition, and Competitors. If the results are positive, I move on to Second Principles: Price, Economics, Ability, and Strategy. If these remain intact, I move to Third Principles: Capital, Team, and Time.
First Principles
1. Feasibility: Should the Park Be Shut Down?
Here, I question the idea that a park can be “beyond turnaround.” Some investors shy away from mismanaged parks or ones with low occupancy and poor collections, thinking it’s impossible or too intensive to bring them back to life. I ask myself if this park can still be the highest and best use of the land it sits on.
In this case, I analyzed the community’s location, the market’s condition, and decided this Mobile Home Park wasn’t too far gone. Last year, I’d looked at another park in such bad shape that unless it was sold at land value, it wasn’t feasible to bring it back. This one, though, was different.
With a positive conclusion on this Core Principle I build on it later with the related Second Principle thinking- Price.
2. Location: Will the Jobs Leave, and the Population Decline?
In the industry, we hear conventional advice: Don’t buy a community in a rural area, avoid small metros, or don’t go below a certain population threshold. If the population has declined, you should walk away. I challenge these assumptions and break them down. In this location, is there a genuine risk of employers shutting down? Will there still be available jobs for residents? More importantly, will the population truly fall to zero? If a city has a net outflow of citizens, does that make it a poor investment choice?
In this case, the population was around 66,000, having decreased by roughly 2,000 over four years. I asked myself if this decline would realistically reduce demand for a 188-lot mobile home park. My answer was no. I also considered whether the housing supply was so high that we’d struggle to rent homes at the rates we needed. To test this, we placed ads and observed a strong influx of inquiries.
I also reviewed current rent rates in the area to determine if we could meet our financial targets. The results aligned with another park I own 30 miles away, where rent rates for apartments and houses are typically above $1,000 per month, often reaching $1,500 for three-bedroom units. I found that similar communities were renting homes at $100 to $250 more than this park’s current rates.
Based on these findings, I concluded that the population decline here wouldn’t lead to a housing surplus or cause prices to fall and homes to sit vacant. Given the rate of decline (500 people per year), it would take over 60 years for the population to drop to 30,000.
With these factors thoughtfully examined and resulting in a positive assessment, I would build on it with second principle building block for location, which is Economics.
3. Condition: Too Much Work to Turn It Around?
Some communities are so poorly managed that the cost to fix them outweighs the potential profit, making them unsound financial decisions. This is often a valid assumption, but it’s essential to examine the work required and assess if it hinders the profitability needed to make the investment viable. More importantly, are we capable of doing this work to make it profitable? Everyone has limits—whether physical, cognitive, or based on experience.
With 15 years of experience fixing up real estate, it would have to be extremely bad for me to think a property couldn’t be salvaged. This community, for example, has solid fundamentals: it’s at about 50% occupancy, 70% physical lot occupancy, and is served by city water and sewer. Yes, the pipes are old, there are vacant lots, and some meter pedestals need updating. But these factors alone don’t mean the answer is a flat “No.”
So I proceeded to assess whether the turnaround was achievable. I made calls to verify that no legal or regulatory issues would block necessary improvements. Early due diligence with local government confirmed zoning, requirements, and the permissions for land use. One downside was that the city wouldn’t allow my hybrid RV model for infill, meaning only new homes could be used. While this isn’t ideal, it doesn’t prevent profitability.
When analyzing these decision-building blocks, each question and assumption connects with others. Here, the main question isn’t just about the condition itself; it’s whether the work needed is financially sound and if the answer is yes, whether it can be done successfully.
If Condition isn’t a roadblock, I then move to build on it with its building block of Second Principle thinking—Ability.
4. Competitors: Will Someone Else Buy It and Profit?
When evaluating a deal others consider poor—perhaps due to its rural location, level of mismanagement, or other factors—one question I ask myself is, “Will a competitor come in, buy this, and make a profit?” If the answer is “possibly” or “yes,” I dive deeper. I analyze how they might succeed, what strategies they could use, and the rates they might charge. I essentially “stress test” the investment to see what levers need to be pulled to make it profitable.
For this community, I believe the answer is yes—another firm could step in and make it work.
When I reach “yes” on this and all previous assumptions, it leads me naturally to the next building block related to Competitors in my Second Principle Thinking: Strategy.
Second Principles
When making a decision, if you consider each option and ask, “And then what? And after that?” you’re engaging in Second Principle Thinking. After establishing core feasibility through First Principles, I move to Second Principles, evaluating factors like price, economics, and strategy to determine a park’s fit within my business model.
1. Price: Can You Get It at the Right Price?
Next comes the price. Many investors look at it and pass on the investment if the price seems too high. I prefer to reframe this question, asking instead: Based on what I know today and the unknowns I can account for in pre-due diligence, what price would make this a good investment? I look for the price that would make the turnaround feasible, allow me to improve the condition, and achieve the required profit margins over a 5- to 7-year horizon.
For this community, we settled on a target price range of $4 million to $4.2 million, and we were able to contract it at $4.15 million. This price allows us to budget conservatively for CapEx, allows for a gradual infill and rent increase timeline, and still achieves a deal multiple of over 2x equity and a double-digit cash-on-cash return. With this pricing in place, I could move on to the next assumptions.
2. Economics: Does the City Have Jobs and Demand for Affordable Housing?
Here, I build on the Location assumptions. I examine whether the economics of the area support the park’s size, rental rates, and potential home sales. In this area, there are approximately 400 homes on the market, with half under $200,000, and a median home price of $125,000 (a 7% increase year-over-year). The average days on market is 94, a 25% decrease year-over-year. I also checked rental rates and found that three-bedroom homes rent for between $800 and $1,800, with a median rate of $1,100. Two-bedroom homes rent on average for $850 per month, which, by industry standards, would support a $425 lot rent. My experience with another park 30 minutes away confirms that these figures are accurate for this part of Georgia.
I also examined local job opportunities, finding major employers such as Proctor & Gamble, the US Military, Albany State University, a large hospital, and the MillerCoors plant. Along with various agricultural and service jobs, these factors suggest economic support for rentals and home sales in the area.
Finally, I spoke with the building department about future developments and the need for affordable housing. They expressed strong support for mobile home parks and emphasized the ongoing demand for affordable housing and additional mobile home communities.
These findings led me to conclude that, despite being in a small city of 60,000 with a slight population decline, the area’s economic fundamentals don’t negatively impact this investment on the basis of economics.
3. Ability: Are You Capable of What’s Required?
Building on the Condition assumptions, I next consider if my team has the capability to take on the necessary projects to make this investment successful. We first challenged the assumption that the mismanagement or disrepair might be too extensive for profitability. After concluding that it wasn’t, we then needed to assess if we had the required skills to carry out the improvements. This is where operators often diverge; it comes down to experience, cognitive ability, or even physical capability. What may seem insurmountable to one Operator might be manageable to another.
For this community, we evaluated the tasks needed: demolishing units, coordinating with local government, handling evictions and collections, renovating vacant homes, and infilling vacant lots. We also assessed landscape improvements and water, sewer, and electrical infrastructure upgrades. After careful review, we recognized that it would be a substantial workload. However, none of it was beyond our scope or abilities. Our past experience aligns well with this mobile home park’s needs, and our problem-solving skills and willingness to learn any new requirements give us confidence in making this investment perform as expected.
4. Strategy: Do You Understand the Levers That Need to Be Pulled and How Others Might Approach the Deal?
The final building block expands on the Competitors principle. If someone else bought this park, would they profit from it? If so, how? Here, we’re analyzing the community’s desirability and profitability. We concluded that if we didn’t purchase this park at the current price, another firm would—and they would likely profit.
We evaluated various strategies and levers that we could apply to make this investment successful. The park’s current operations, with below-market rents and a high percentage of park-owned homes, leave substantial untapped potential. Our analysis, using First Principles and subsequent layers, indicated that the area’s economic factors support both rentals and homeownership, highlighting a need for affordable housing. This makes a Rent-to-Own or Home Sales Program especially viable for this community. Keeping it strictly as a park-owned community would limit its potential; by offering ownership options, we can attract more residents who want to own their homes.
Additionally, we identified that strategies like Pass-Thru Fees or Bill-Backs, commonly used by other Operators, could be advantageous here. After reviewing neighboring mobile home parks, their operations, and pricing, we concluded that this community could indeed be profitable with the right strategy. Our business plan aligns well with these strategies, giving us confidence in our approach to achieve the community’s full potential.
Third Principles
After Second Principle Thinking, I proceed to Third Principles—reflective questions beyond the numbers. We must challenge our Conviction and Confidence in the deal and root it in reasonableness of us being able to take this Investment on. This is thinking beyond that of the deal, and more about us as Operators. Whereas with Second Principles we questioned our Capability and Strategies – with Third Principle Thinking, we are evaluating our Resources.
1. Capital: Can You Raise the Funds?
The old saying, “If you have a good deal, the money will find you,” sounds great in theory. However, it doesn’t always work that way, and securing funding isn’t easy for many Operators. Success depends on your network, capital-raising systems, and reputation. Navigating negotiations, due diligence, and loan processes without reaching the closing line can be both emotionally and financially taxing. Getting a Mobile Home Park to the finish line isn’t cheap.
This investment is significantly larger than any we’ve taken on before. However, we’ve built a solid capital-raising system and developed a network of investors who’ve seen success with us in past projects. While this deal is double the size of our last investment, it represents positive and realistic growth for us.
I didn’t say “yes” because it’s such a great deal that the money will find us. Instead, I said “yes” because I believe in our ability—and that of our partners—to marshal the necessary capital to purchase and turn around this mobile home park.
2. Team: Do You Have Team Support?
Team support is essential when taking on a new investment. It’s easy to assume that because they work for the company, team members will do whatever’s necessary. While that’s often true, as we scale, roles expand and workloads grow. We have to consider the impact of each new investment on the existing team. Are they on board with the expansion? Do they align with the company’s vision and future?
Each park adds more responsibilities, and while we can’t predict the exact demands of any particular acquisition, we can assess our team’s workload and motivation to support the new investment.
In our case, we’re growing, and each team member is already handling a significant role. However, they’re also aligned with our vision for growth. They understand that with growth come synergies and economies of scale, and they’re excited about that. After getting the contract, I spoke with department heads about our plans, and their response was met with enthusiasm and strategic thinking. We discussed the potential need for new hires, system upgrades, and what implementation would involve.
Acquiring another Mobile Home Park is more than just adding residents to the portfolio—it means more maintenance requests, collections, notices, visits, vendor relationships, and even additional branding and marketing efforts. This expansion will impact our core management operations, so proactive planning and team involvement are essential. Knowing what we’ll need at the transition point is paramount to success and keeping our team motivated.
After these discussions, I felt confident in our team’s commitment and readiness to take on this new investment, ensuring we have the support and resources to integrate this addition into our portfolio.
3. Time: Do You Have the Bandwidth?
Time is one of our most valuable assets, and sometimes we pass on investments not because they’re bad deals, but because we simply don’t have the bandwidth. I’ve seen too many Operators go “acquisition crazy,” buying more Mobile Home Parks than they have time to manage and improve. As a result, these parks often languish, neglected, while the Operator’s attention is spread too thin.
When assessing a new investment, I analyze the time required to turn it around. I also evaluate how well it aligns and synergizes with our existing communities. Proximity to other parks, shared vendors, travel time, and team integration are all key considerations. How close is it to another park we own? Can we save time by using the same vendors? Will it streamline the implementation of systems and team workflows?
Taking on a large turnaround project—with collection issues, vacancies, infill, and rehabs—demands a considerable time commitment from all departments. Do we have the time to dedicate to this? More importantly, does it make financial sense to allocate that time here, or would our efforts be better spent on a different investment with similar or better returns?
In this case, I determined that we do have the bandwidth, and the project aligns well with our existing parks. This community is located just 30 minutes from another of our Mobile Home Parks, enabling us to share skills, systems, and resources seamlessly across projects. I spoke with several trusted vendors who confirmed they can handle the initial improvements, minimizing travel and coordination efforts. Additionally, the presence of an on-site office and staff further reduces the logistical burden.
These factors made this project a welcome addition to our portfolio and a good use of our time and resources.
A Final Example
I was recently offered a deal for a 107-unit park at $1.6 million with seller financing terms. On the surface, it seemed ideal—who would turn this down? But I did, and here’s why.
The park is located in western Alabama, hours away from my nearest community, hours from a major airport, and not close to any major highways. I started to analyze the time required for me or my team to manage it, including travel and finding reliable vendors. There would be no operational synergies.
Financially, it was only bringing in around $13,000 per month, with low rents and just 50% occupancy. To my knowledge there were no vacant homes to rehab; everything would need to be infilled with new homes to increase occupancy and unlock any meaningful value. Right away, I was short multiple levers to make this investment profitable.
In comparison, the 188-lot community I’m considering is close to my other parks, offers synergies, and has many vacant homes ready for rehab to quickly add revenue. It’s producing nearly $45,000 per month in revenue—far more than needed to meet the debt load even before rent increases and bill-backs.
While the $1.6 million price tag in Alabama was tempting, it didn’t allow for positive assumptions in my other core principles. For one, the town has a population of just 3,000, meaning 3.5% of the entire town would need to live in the community to fill it. In contrast, the 188-lot community requires only a fraction of that demand. That alone is not a negative, but coupled with its other issues, stops me from proceeding.
The Alabama deal also posed a huge drain on my team’s energy, drawing resources away from our other projects for a lot of work with little gain. Additionally, the time commitment would be immense, not only for the turnaround itself but for travel, logistics, and building new service teams.
So, while the price and terms seemed favorable, these factors ultimately led me to turn it down. The other considerations outweighed any initial appeal.
So, Should I Buy It?
Yes, after working through my First Principles, along with my Second and Third Principles, I knew this was the right deal for us. The difference between me and the investor who passed on it really comes down to the “Season” of our careers. Not every deal is right for every operator. Someone might have the ability, the capital, and the team, but still decide it’s not worth their time. It’s more about where they are in their journey than the actual deal itself.
For me, using this approach—First Principles backed by the layers of Second and Third Principles—gives me an edge in deciding which parks to add to our portfolio. It lets me make sure we’re stewarding our investor capital properly by vetting each deal not just by the numbers or the specs of the deal but on a solid logical foundation that makes sense long-term. This process allows me to challenge my own conviction in a deal before moving forward with raising capital, which means I step into each investment with real confidence.
In the end, this disciplined process allows me to add value, take on projects that align with our goals, and grow the portfolio in a way that benefits both our team and our investors. Each deal I choose to take on has been tested, and that’s what sets us apart. It’s not just about going after every “good deal”—it’s about taking on the right deals, built on a foundation of smart, logical thinking.
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Lock N’ Load
The MHP Operator
Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial or legal advice. I am not a licensed financial advisor, lawyer, or CPA, and you should consult with a licensed professional before making any legal or investment decisions.
