Simulation: a fictional property for practice.

A home in a Nevada park, on a rented lot

A 2010 single-wide in a park is for sale for $60,000. You’d rent it out for $1,500. The lot rent is $900 a month.

A fictional home in a manufactured home park in Nevada. The lot-rent notice rule is Nevada’s (NRS 118B); park rules and costs are examples.

• Price: $60,000 cash for the home only; the park owns the land
• Home: 2010 single-wide, 2 bed, 2 bath, 980 sq ft
• Lot rent: $900 a month, up $75 last year
• Your plan: Rent the home to a tenant for $1,500 a month

Mission 1: What do you read before you buy?

Pick all you’d check first.

• The park’s rules on renting your home to a tenant
• Whether the park must approve you as the new resident or owner
• The lot-rent history and the rental agreement
• The home’s title, and any unpaid taxes or liens on it
• Nothing: lot rent stays the same as long as you own the home

In a park you own the home but not the ground under it. The park’s rules and the lot rent decide whether it works.

Mission 2: The monthly numbers

• Rent from your tenant: $1,500
• Lot rent: −$900
• Insurance and the home’s tax (assumed): −$80
• Repairs and vacancy (assumed 10%): −$150
• Cash flow: $370 a month: $4,440 a year, 7.4% on $60,000
• If lot rent rises $100 a month each year for 3 years: Cash flow falls to about $70 a month

Lot rent you don’t control can take most of the profit. Test the numbers with higher lot rent.

Mission 3: When you sell

What should you expect when you sell the home?

• Buyers will mostly pay cash or use personal-property (chattel) loans, and the price depends on the park and its lot rent
• It will rise in value like a house on its own land

Chattel loans generally cost more than mortgages, which limits who can buy from you.

At $60,000, what do you do?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.