What is SCI’s Due Diligence Process for Selecting Mobile Home Parks?
At Sunrise Capital Investors (SCI), our due diligence process for acquiring mobile home parks (MHPs) is designed to surface high-quality opportunities while minimizing risk. Every deal undergoes a multi-phase evaluation, from physical inspections to infrastructure assessments to financial audits, before it’s considered for acquisition.
This article outlines how we assess MHPs, what criteria we look for, and how that process supports SCI’s long-term investment strategy.
Key Takeaways
- SCI targets income-producing mobile home parks with stable tenants, positive cash flow on day 1, and potential for upside.
- Due diligence includes site visits, infrastructure checks, and financial audits before any asset is acquired.
- Assets must demonstrate strong fundamentals and align with SCI’s operational standards
- Conservative acquisition strategies prioritize stability, long-term value, and capital protection
- Fixed-rate financing and conservative loan-to-value ratios provide flexibility around exit timing without pressure from debt maturities
Table of Contents
- How Does SCI Evaluate a Mobile Home Park?
- What Happens After Acquisition?
- What is SCI’s Exit Strategy
- Why Due Diligence Matters in Real Estate Investing
- Frequently Asked Questions
How Does SCI Evaluate a Mobile Home Park?
Initial Screening
Before we ever step foot on a property, our team performs a desktop analysis to assess the basics: location, lot count, current rents, historical occupancy, and initial financials. This helps us filter for parks that are likely to meet our core criteria:
- Strong demand drivers in the surrounding market
- Infrastructure viability (public utilities preferred)
- Rent-to-income ratios within a sustainable range
- Value-add opportunity without excessive deferred maintenance
- Margin of safety – ability to acquire the property for less than market value
Site Visit and Physical Inspection
Our team conducts on-site evaluations to assess:
- Water, sewer, and electrical systems
- Road conditions, landscaping, and pad layout
- Common areas, signage, and amenities
- Presence of abandoned homes or code violations
If infrastructure issues appear too costly or the park doesn’t meet operational standards, we walk away.
Additionally, we reach out to Vendors such as plumbers, landscapers, or trash companies to understand the community from their perspective and to verify cost and scope of work.
Tenant Review and Community Assessment
We perform detailed tenant profile assessments to evaluate:
- Rent payment history and delinquency rates
- Lease terms and occupancy duration
- Resident ownership structure
- Community culture and reputation
The goal is to confirm a stable resident base and ensure there’s potential for long-term retention.
Market and Supply Analysis
MHPs are hyper-local. We evaluate:
- Historical occupancy
- Local rent comps and affordability trends
- Historical housing supply and barriers to new development
- Presence of competing parks and their quality
- Employment drivers and demographic stability
Parks in constrained markets with limited new supply are prioritized.
What’s more, we conduct test ads to gather real time data on the demand in the local market.
Financial Modeling and Stress Testing
SCI analyzes multiple years of financials and other critical operational documents before purchasing a property. We examine documents such as but not limited to:
- Balance Sheets
- Vendor Contracts
- Tax Records
- Utility Bills
- Legal Disputes
What Happens After Acquisition?
Once an asset is acquired, SCI begins executing its operational plan. Improvements are made systematically, often starting with infrastructure, visual appeal, and resident communication.
What’s more, SCI also conducts a post-closing debrief to ensure a seamless transition. This helps us review any lessons learned during the acquisition.
Over time, we aim to improve occupancy, streamline costs, and adjust rents to be closer to the market rate.
What is SCI’s Exit Strategy?
SCI’s exit strategy centers around long-term holds with refinance-driven liquidity events. Here’s how it works:
- Cash Flow First: Assets are income-producing at acquisition.
- Operational Improvements: NOI is increased through targeted upgrades and operational efficiency.
- Return of Capital: SCI may execute a cash-out refinance to return investor principal, minus a fee.
- Strategic Sale (if needed): If market conditions warrant, a sale may be considered, but only if it aligns with long-term goals.
Why Due Diligence Matters in Real Estate Investing
In real estate, risk often hides in the details. SCI’s due diligence process is designed to eliminate guesswork by thoroughly validating every input.
By doing the work upfront, we aim to acquire durable, income-generating communities that perform reliably over time.
Frequently Asked Questions
SCI follows a ten-step acquisition process designed to ensure disciplined, efficient, and repeatable deal execution: sourcing and initial screening, preliminary underwriting, formal offer submission, Investment Committee approval, PSA execution, comprehensive due diligence, capital and debt structuring, closing preparation, post-closing transition, and continuous integration of portfolio performance into future underwriting assumptions.
No. While this article focuses on MHPs, SCI also acquires structured parking assets through the same rigorous evaluation framework.
If a deal doesn’t meet SCI’s standards for infrastructure quality, we will typically attempt a renegotiation and if the seller is not agreeable to our changes based on findings, we pass.
Most assets are held long-term, with refinances providing interim liquidity. This long-term view allows SCI to optimize operations without pressure to sell prematurely.
Brian Spear
Co-Founder | Sunrise Capital Investors