One thing I’ll say for the mobile park business is that it’s good for people because people need affordable housing. In Washington State, we have something called a housing gap. That means more people need housing than can afford it. As a means of fixing this, the state’s Department of Housing and Urban Development (HUD) has worked out a new program to get low-income residents into homes—and one of the communities they’re targeting is mobile home parks.
The tricky part about working with HUD as a mobile home park owner in Washington is that often, what qualifies someone for state benefits disqualifies them from renting space in your park, even though HUD is helping them with the purchase of their home. So, you might need to get creative with your math to help someone using this program meet the criteria to rent a lot in your park.
What You Must Know About HUD’s Low-Income Program
There’s a paradox about low-income home ownership—often what qualifies someone for help from a Washington HUD program disqualifies them from renting in a mobile park community. Generally, a HUD program states:
- The individual needs to be a resident of Washington State. Many benefits are federally funded, but granted on a state-by-state basis, so someone usually needs Washington residency status to apply for Washington State housing assistance.
- They are a lower income family, disabled adult, or senior citizen. An able-bodied adult, for instance, is not going to be able to be part of this program unless they’re responsible for caring for children under the age of 18.
- Their income does not exceed a maximum amount set forth by the agency providing the funding. Most rental assistance and homeownership programs start to phase out when someone makes around $35k a year.
Now here’s the issue that I usually run into. In a straight sale, where someone is purchasing a home and land outright, they don’t have to deal with landlord rental criteria. But in a situation where someone is buying a mobile home, they’re going to need to rent space in a park in order to live in it. Me and most park owners I know have criteria that demand a minimum gross income to qualify to rent a space.
But, if someone is qualifying for a HUD program, then chances are they have very low, or no income from working. The lower income that qualified them to work with HUD in the first place is going to keep them from renting a space in my park. If you want to work with one of these programs, you’re going to have to make a few adjustments to your rental criteria based on the type of program the individual is using.
Working with Low-Income Washington Residents and HUD
HUD has more than a few programs in place to help low income Washington residents get into mobile homes. One such program is the FHA Title 1 program, which connects low income lenders with individuals who want to purchase a home. What’s important to note is that these loans are not funded by HUD, just insured by them, in that HUD guarantees the down payment so someone can qualify for financing. Under this program, the individual has to have income because they’re working with a lender.
When someone uses one of these HUD programs, they’re using them to finance the purchase of the actual mobile home, not to cover park rent. Park rent is covered under a separate rental voucher program, usually Washington’s Section 8 rental voucher program. With this program, the individual is the recipient of federally funded vouchers that have a specific redemption value paid directly to the landlord.
Accepting Section 8 Rental Vouchers as Rent
For me, if a tenant can prove an ongoing source of funding, then I don’t just look at the hard numbers. I look at how likely someone is to pay and how likely their sources of income are to continue. People get paid a lot of different ways, so low-income doesn’t mean they don’t have any income.If you think they’d make a good tenant, but they don’t have regular income from a job to prove they can afford rent, look to the voucher program.
If someone’s looking to rent in your lot using a rental voucher, you can simply calculate the total value, guaranteed for a period of one year, and add that to the individual’s income, usually making them qualified to live in your park. When they have to renew their lease, they’ll also have to renew their voucher eligibility—and you should again calculate their income with the inclusion of the value of these new rental vouchers.
Usually these programs work directly with the resident, in that they require inspections of the home to ensure it qualifies. Leave that to the resident to handle. You just worry about making sure the math adds up and they can afford to live in your park. Don’t fudge the numbers. If after you add everything up, you realize there’s no way the person could afford to rent with you, then you’d be doing them a disservice by renting to them anyway. Either turn them down, or see if you can offer a lower cost space to rent.
Low-income programs are great if you can work with them. The problem is that most of the time, what qualifies someone for low-income home ownership assistance also disqualifies them from renting from you—don’t force the math for the sake of getting a new tenant.
Park ownership isn’t for everyone. Some get into the business thinking it’s not going to be quite as complicated as it is. But when you’re providing lower income housing, you’re also up against a lot of issues with folks struggling to pay their rent. If you’re tired of dealing with the struggle, contact me. I’ll give you a fair price on your park and keep it open, so people can get the low-cost housing they need.