Park-Owned-Homes vs. Tenant-Owned-Homes

The Economics & Strategies of Both Models

In the manufactured housing world, one of the biggest strategic decisions an operator must make is whether to structure a community with park-owned homes (POHs) or tenant-owned homes (TOHs). On paper, POHs can look attractive because they generate higher gross rent. In reality, the economics often tilt strongly toward TOHs—both for the operator’s bottom line and for the long-term health of the community.

At Comfort Capital, we’ve learned through years of experience that while POHs have a place as a short-term tool, TOHs deliver far more stability, less operational headache, and better exit valuations. Add in options like rent-to-own (RTO) programs or carrying home notes, and the strategy becomes even more nuanced.

Defining the Models: POH, TOH, RTO, and Home Notes

A tenant-owned home (TOH) is one in which the resident owns their home and pays a monthly lot rent for the space. The operator is responsible for the land, infrastructure, amenities, and general community management—but not the upkeep of the home itself.

A park-owned home (POH) is owned by the operator and rented like a traditional apartment or single-family home. This means taking on full landlord responsibilities for the structure, including maintenance, turnovers, insurance, and taxes.

Rent-to-own (RTO) sits between the two, often structured as a lease with an option to buy or credits toward purchase. When done correctly, it creates a clear path to ownership.

Home notes (retail installment contracts) occur when the operator sells the home but carries the financing, receiving monthly payments like a lender. This can be effective for creating homeowners but comes with regulatory requirements.

The Economics in Practice

Consider a simple example. In a 100-site community with lot rent at $700 per month, gross annual income from TOHs would be $840,000. With operating expenses around 35%, the NOI comes in at $546,000, with no capital tied up in homes.

Now compare that to a POH model. Adding $550/month for the home brings rent to $1,250, for $1.5 million in annual gross. But once you factor in repairs, turnovers, vacancy loss, insurance, taxes, and administrative costs, those expenses climb sharply. If your home fleet cost $6 million to acquire, the cost of capital alone can wipe out much of the NOI advantage. When you measure return on equity—not just raw NOI—TOHs typically outperform.

The Park-Owned-Home Model

A POH (Park-Owned Home) model is when the community owner retains ownership of the mobile or manufactured homes themselves and rents them out to residents, rather than just leasing the land. In this model, the operator collects both home rent and lot rent, but also assumes all the costs of home maintenance, repairs, insurance, and property taxes for those units.

There are times when POHs are useful. They can fill vacant pads quickly, making a community more attractive to both lenders and buyers. They can also serve as a stepping stone toward homeownership through RTO agreements or in-house financing. The key is to treat POHs as a temporary bridge, not a permanent model, and to have a clear plan for converting them to TOHs within a set timeframe.

But POH heavy models are risky…

POH-heavy communities face higher maintenance and turnover costs, plus additional insurance and personal property tax burdens. Managing these homes also adds operational complexity, as you’re running both a land-lease business and a rental housing business at the same time. On top of that, landlord-tenant regulations for dwellings are often more demanding than those for lot rentals, increasing legal and compliance exposure.

Why We Prefer TOH Over POH

While POHs can increase gross income, they carry significant downsides. Tenant-Owned-Homes (TOHs), by contrast, shift the responsibility for interior repairs, appliances, and general upkeep to the resident. That means lower operating costs, fewer headaches, and more predictable cash flow.

TOH residents also tend to stay longer, keep their homes in better condition, and invest more in their surroundings. This pride of ownership translates into a cleaner, safer community that’s easier to finance and more valuable at sale. Banks and buyers favor TOH-heavy communities because the income is more stable and the expenses are easier to underwrite, resulting in stronger valuations.

Our strategy is to underwrite acquisitions based on TOH economics, even when POHs are included. We use POHs only to fill pads and stabilize occupancy, then move quickly to sell those homes to residents via financing or rent-to-own programs. Once a community is predominantly TOH, operations are leaner, expenses are lower, and the asset is positioned for a stronger exit with better financing terms and a more favorable cap rate.

The choice between POH and TOH isn’t just about rent levels—it’s about long-term performance, risk management, and community stability. While POHs can be a useful tool in certain situations, TOHs offer lower costs, better financing outcomes, and a stronger resident base. For operators focused on sustainable, high-quality communities, maximizing TOH is the clear path to long-term success.