Nov 18, 2021
MHP Podcast Episode 9: POH vs. TOH and How Each Type of Residence Should Be Valued
In this episode, we explain the difference between a park-owned home (POH), a tenant-owned home (TOH) and a hybrid model that’s a little of both. Then you’ll learn how each type of housing unit is valued when determining a market price for the community you’re thinking of buying or selling.
As always, this episode, hosted by Maxwell Baker, was brought to you by The Mobile Home Park (MHP) Broker’s proprietary Community Price Maximizer. With our system and our very experienced brokers, we’ll guarantee you a higher price when you later sell your mobile home or RV community.
Here Are The Show Highlights:
- A park-owned home (POH) is one which community owners own. They’re responsible for repairs, and they lease these units to tenants much like they’d rent any apartment unit if they were a landlord. (:42)
- A tenant-owned home (TOH) is one that’s owned by the resident. The park owner just rents the lot, or the space in an RV community. (3:00)
- In the hybrid model, the mobile home or RV is owned by the park owner, but some of the monthly payments are dedicated to financing the unit by the tenant n a rent-to-own lease arrangement. (1:08)
- Many investors prefer parks with TOHs for their hands-off simplicity, especially situations in which water, sewer, electrical and trash pickup are directly billed to the tenants.(3:00)
- POH communities are less highly sought by buyers because they’re inherently riskier than TOH parks, so investors expect a higher return on investment. (2:51)
- The hybrid model can be problematic for investors and park owners. First of all, it can be difficult to legally determine whether a delinquent payer can be foreclosed on or must be evicted. That might be based on how much equity they’ve built up and the jurisdiction in which the park is located. (2:02)\
- One of the most desirable models is when the city owns the roads, water and sewer lines and other infrastructure, because the park owner is not responsible for the cost or involvement in maintenance or repairs. (3:45)
- Other factors determining market price include lot size and location. (15:39)
Want to know more about The MHP Broker approach to buying and selling RV and mobile home park communities based on the status of the homes in the park? Just drop me a line at info@themhpbroker.com or give me a call at 678-932-0200.
Power Quotes From Max on Episode 9:
- “(Homes in the hybrid model) are a little bit more complicated because when you go to sell them, there's four variables we as a company look at when it's time to look at these assets and these agreements.”(1:08)
- “One of the rare things out there is the dedicated roads or public roads. So, in that instance, if you get a pothole you just call the municipality and they'll come out in theory and fix the pothole for you. That's like the cream on the top when it comes to mobile home parks. That's basically the infrastructure you want… (3:45)
- Tenant-owned homes are always going to be less risky than park-owned homes because… they have fewer variables…(and investors are) usually going to pay higher prices for these because they inherently do less to manage them…You can sit on the beach and drink your pina colada...” (4:22)
- (POH are) just tough to sell. We sell a lot of those because we're good at selling park owned home deals because we evaluate it properly. It really just depends on where the market is, how the infrastructure of the utilities is set up and management and lot size…” (14:23)
- “... the gold standard is the direct billed everything.” (14.53)