Park-Owned vs Tenant-Owned Homes: Mobile Home Park Math

The choice between park-owned vs tenant-owned mobile homes comes down to how much operational load you can absorb, not which one shows the better pro forma. Tenant-owned lots mean you collect space rent and nothing else — no water heater calls, low turnover, minimal management. Park-owned homes usually return more, and the extra return is payment for owning every repair in every unit.

Chad Costa, a California broker with five RE/MAX franchises, started buying parks about three years ago and now owns four across Alabama, Oklahoma and California — roughly 200 doors. He also holds 16 single-family rentals in Arkansas, which gives him a clean side-by-side on rents, tenant profile and management burden.

What follows: how the two models actually differ in practice, why mixed parks are common, the rent and demographic shift that surprises new park buyers, and the single hire that determines whether either model works.

From the Real Estate Pros Show

This article draws on an interview with Chad Costa of RE/MAX Executive / Treco LLC on the Real Estate Pros Show, hosted by Scott Bursey.

The Two Mobile Home Park Models, Side by Side

There are two basic structures, and they produce completely different businesses on the same piece of dirt.

Tenant-owned homes. The resident owns the physical home; you own the land and the infrastructure. You collect space rent. As Costa puts it, there are no phone calls for repairs — no broken water heater, no dead ceiling fan. Low maintenance, low management, low turnover. A resident who owns their home and would have to pay to move it is a resident who tends to stay.

Park-owned homes. You own the land and the house. Rent is higher per door and the return is typically better, but you’ve just taken on a rental portfolio inside a land business. Every appliance, roof, furnace and turn is yours.

Most real parks are not purely one or the other. Of Costa’s four parks, some are entirely park-owned, some entirely tenant-owned, and some are a mix. That mix matters when you’re underwriting: a park that is 60% tenant-owned and 40% park-owned has two expense profiles stacked on one rent roll, and you need to model them separately rather than blending them into a single per-door number.

When you tour a park, count the homes by ownership before you do anything else. The same 80-space park can be a nearly passive land lease or an 80-unit rental operation depending on that count, and the asking price often doesn’t reflect how much work is attached.

Why the Decision Is About Bandwidth, Not Just Yield

Costa frames the choice as a capacity question: it depends on your bandwidth for how much time you have to spend on maintenance and management, and on who you have as management.

Read the higher park-owned return as compensation, not as free money. You are being paid extra because you’ve agreed to field repair calls, carry turn costs, replace homes that age out, and supervise more people. If you don’t have the management structure to absorb that, the premium evaporates into deferred maintenance and vacancy.

Practical way to size it before you buy:

• Count the park-owned units and treat each as a small rental you now own, with its own maintenance reserve and turn budget.
• Check the age and condition of those homes. Older park-owned stock is where capital goes to die — a 1970s unit may cost more to rehab than it’s worth.
• Decide who answers the phone. If the answer is “me,” buy tenant-owned. If you have a manager and an oversight layer, park-owned becomes workable.

A mixed park genuinely splits the difference. You get space-rent stability from the tenant-owned side and upside from the park-owned side, with the option to convert park-owned homes to tenant-owned over time if the maintenance load proves heavier than you planned. That optionality is why mixed parks are often the most forgiving entry point for an operator who has never run one.

It kind of depends on your bandwidth for how much time you have to spend on maintenance and management, and who you have as management. On-site manager is so critical. I’ve learned that pretty quickly.

— Chad Costa, RE/MAX Executive / Treco LLC

The Rent and Tenant Profile Shift Investors Underestimate

The number that caught Costa off guard was not the cap rate. It was the rent.

His 16 Arkansas single-family rentals average about $1,500 a month. His park rents run around $650, depending on whether it’s space rent or a park-owned home. Going from 16 doors to roughly 200 across four parks also meant a lot more tenants, and he describes the demographic as different from single-family. That adjustment — more residents, smaller individual checks, a different resident profile — was the biggest surprise of the transition.

This isn’t a judgment on residents; it’s an expectation-setting problem. A few practical consequences:

• Collections are a volume operation. Two hundred payments at $650 require systems that 16 payments at $1,500 never did.
• A single delinquency barely moves revenue, but a pattern of them does. Your manager’s collection discipline matters more than any one tenant file.
• Per-door economics are thin. At $650, one unbudgeted $900 repair wipes out more than a month of that unit’s revenue. That is the core argument for tenant-owned lots.

If you’re moving into parks from single-family, build your model on the real rent band in the market you’re buying, not on the per-door intuition you carried over from houses.

The On-Site Manager Is the Whole Investment

Costa learned this fast: the on-site manager is critical, and getting it wrong is expensive. In three years he has already had to help one or two managers, in his phrasing, find a job and be great somewhere else.

The on-site manager controls everything you can’t see from another state — who gets approved, whether rent gets collected on time, whether the common areas look occupied or abandoned, whether a small plumbing issue gets reported or ignored until it’s a line break. In a park-owned-heavy property, that person is also effectively your maintenance dispatcher.

Costa’s structure has two layers. The on-site manager handles the property. Above them sits an oversight management company that handles day-to-day operations and supervises the managers themselves. He chose that firm deliberately: they have been doing this for 20 years, and he has been doing it for two or three.

That’s the useful model for anyone entering the asset class. You are not paying the oversight company to collect rent — a manager can do that. You are paying them to know what a competent park manager looks like, to catch problems you wouldn’t recognize, and to replace people without the whole property stalling. It also cuts the hours the owner personally spends on oversight, which is the only way a four-park portfolio coexists with another business.

Managing Parks From Another State

Costa is direct about it: management from afar is not easy and can be challenging. His fix is specific and worth copying.

Every month, the on-site managers do a video walk-through of the property on camera. In Costa’s words, they’re not telling him everything is great — they’re showing him everything is great. That distinction is the whole point. A written report can describe a clean park. Video of someone walking the roads, past the vacant pads, around the back of the park-owned homes, cannot.

Some things that makes it work:

• Make it recurring and dated. Monthly footage gives you a visual record you can compare month over month, which is how you catch slow deterioration.
• Specify the route. Otherwise you get the nice half of the park every time.
• Include the units you own. Park-owned homes are where condition drifts fastest.

The second half of remote ownership is admitting what you don’t know. Costa’s approach has been to lean on people who know more than he does — he relies heavily on the oversight firm precisely because of the 20-years-versus-two gap. For an investor crossing into a new asset class, that’s cheaper tuition than learning on four properties at once.

How the Cash Flow Compares to Out-of-State Single-Family

Parks are one route out of a low-yield home market, not the only one. Costa’s own exit from California rentals started with single-family, and the math explains why.

He was running roughly a 4% cap rate in California. In Arkansas, he’s just over 8%. He sold six California investment properties, exchanged into Arkansas, and turned them into 16 rentals around Little Rock. The return was about twice what he had at home.

The second driver was landlord-tenant law. During COVID he couldn’t collect rent while still owing the mortgage, insurance and taxes — expenses on one side, no income on the other. He describes the Arkansas environment as more favorable to the landlord, with tenants more likely to pay on time.

The mental barrier was the one most investors have: he wanted to drive by it, see it, touch it. What broke it was realizing he bought stocks without visiting the company’s building or meeting the employees. He trusted a manager instead, and his assessment afterward was that he should have done it a long time ago.

For an investor in a 4%-cap home market, the sequence is useful. Out-of-state single-family with a real property manager is the lower-complexity move. Parks are the higher-complexity, potentially higher-return move, and within parks, tenant-owned space rent is the lower-complexity version of that. Pick the rung that matches the management you actually have in place.

Frequently asked questions

Do park-owned homes really produce a higher return than space rent?

Typically yes — Costa says park-owned homes return a little better than space-rent-only lots. But the spread is compensation for operational load, not a free upgrade. You own every repair, every turn, and eventually the cost of replacing homes as they age out.

Whether the premium survives depends on whether you have management capable of handling maintenance at scale. If you don’t, the extra yield gets consumed by deferred repairs and vacancy.

What happens to maintenance calls when tenants own their own homes?

They largely go away. When the resident owns the home, you own the land and the infrastructure — so the broken water heater and the dead ceiling fan are their problem, not yours. Costa describes tenant-owned lots as low maintenance, low management and low turnover for exactly this reason.

You still carry park-level responsibilities: roads, utility lines, common areas and whatever infrastructure the park’s systems include. Those are capital items, not weekly phone calls.

How do mobile home park rents compare to single-family rents in the same region?

Substantially lower per door. Costa’s Arkansas single-family rentals average about $1,500 a month; his park rents run around $650, varying by whether the income is space rent or a park-owned home.

The practical effect is that park economics are a volume business. You are collecting many smaller payments, so collection systems and a capable on-site manager matter more than they would across a handful of single-family doors.

How do you oversee a mobile home park you cannot drive by?

Require monthly video walk-throughs from the on-site manager. Costa’s standard is that managers aren’t telling him everything is great, they’re showing him on camera — the roads, the units, the common areas.

Pair that with an oversight management company that supervises the on-site manager and handles day-to-day operations. Costa uses a firm with 20 years in the niche specifically because it covers the experience gap he has as a newer park owner.

Should a first-time park buyer start with a tenant-owned, park-owned, or mixed park?

Match the model to your management capacity. If you’re buying out of state with no established manager and no oversight firm, tenant-owned space rent is the forgiving option — fewer repair obligations and lower turnover.

A mixed park is a reasonable middle path once you have management in place: stable space-rent income on one side, higher-return park-owned units on the other, and the option to adjust the ratio over time.

The bottom line

Before you compare returns on two parks, count the park-owned homes in each and decide honestly who is going to answer the maintenance calls — because that answer, not the cap rate, determines which deal you can actually operate.