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POH vs TOH — How Lenders Underwrite Mobile Home Parks
By Jason Taken · Principal, Jaken Finance Group
Park-owned homes vs tenant-owned homes — how mobile home park lenders model income, opex, and agency eligibility on MHC acquisitions.
POH vs TOH is the first fork in mobile home park underwriting — and getting it wrong kills agency refi after bridge. Industry context: Manufactured Housing Institute · Hub: manufactured home community financing
Structure comparison
| TOH (tenant-owned home) | POH (park-owned home) | |
|---|---|---|
| Park owns | Land + infrastructure | Land + homes |
| Primary income | Lot rent | Lot rent + home rent |
| Opex | Lower | Maintenance, turnover, habitability |
| Agency appetite | Strong | Limited — ratio caps |
| Investor role | Infrastructure landlord | Home landlord + park operator |
How lenders model POH income
Separate line items on the pro forma:
| Input | TOH treatment | POH treatment |
|---|---|---|
| Gross rent | Lot rent × occupied pads | Lot + home rent split |
| Vacancy | 5%–10% | 15%–25% on home rent |
| Maintenance | Roads, utilities | +$150–$400/home/mo |
| CapEx | Infrastructure | Home rehab between tenants |
| NOI margin | Higher | Compressed |
Bridge lenders fund POH parks when conversion plan is credible — not when sponsor ignores home liability.
Agency ratio gates
| Agency | POH tolerance (typical) | Implication |
|---|---|---|
| Freddie Mac MHC | Under 5% POH | Heavy POH = no Freddie exit |
| Fannie Mae MHC | Up to ~25% POH | Some legacy POH OK |
| Community bank | Case-by-case | Stabilized TOH preferred |
Most sub-$3M mom-and-pop parks fail agency gates on day one — see MHP loans under $3M.
Value-add: POH-to-TOH conversion
- Sell home to resident — installment sale or cash
- Rent-to-own home to tenant — then transfer title
- Remove abandoned POH — pad-only TOH lot
Conversion unlocks Freddie/Fannie MHC and higher exit cap rate on infrastructure-only income.
Playbook: bridge-to-agency MHP
Worked example — 40-pad park, 35% POH
Purchase: $920,000 · 14 POH units · 26 TOH pads
| Metric | As-acquired | Post-conversion (18 mo) |
|---|---|---|
| POH count | 14 (35%) | 2 (5%) |
| Occupancy | 74% | 88% |
| NOI (annual) | $118K | $168K |
| Refi path | Community bank only | Freddie MHC eligible |
Bridge: 68% LTV + $95K holdback for home disposition and roads.
Worked example — TOH-only 52-pad park (no POH conversion needed)
Profile: Midwest TOH park, city water/sewer, 82% occupancy, mom-and-pop seller.
| Line | Amount |
|---|---|
| Purchase | $1,240,000 |
| Lot rent (avg) | $425/mo × 43 occupied pads |
| Gross annual rent | ~$219,300 |
| Vacancy (8%) | −$17,544 |
| OpEx (38%) | −$83,334 |
| NOI | ~$118,422 |
| Cap rate at purchase | ~9.55% |
| Bridge LTV (70%) | $868,000 |
| Equity | $372,000 |
Agency refi at month 14 (Freddie MHC eligible — 0% POH):
| Line | Amount |
|---|---|
| Appraisal (occupancy lifted to 88%) | $1,480,000 |
| NOI (annual, stabilized) | ~$142,000 |
| DSCR at 1.30x | Max debt service ~$109,230/yr |
| Freddie loan (75% LTV) | $1,110,000 |
| Bridge payoff | −$868,000 |
| Closing costs | −$38,000 |
| Net cash to sponsor | ~$204,000 |
TOH parks skip the POH conversion timeline — refi path is occupancy lift + infrastructure capex, not home disposition. See bridge-to-agency MHP playbook for month-by-month gates.
POH home disposition — three paths with economics
| Path | Timeline | Cost per home | Best when |
|---|---|---|---|
| Cash sale to tenant | 30–90 days | $500–$1,500 closing | Tenant has savings + credit |
| Rent-to-own (12–24 mo) | 12–24 months | $200/mo admin | Tenant needs time to qualify |
| Abandoned home removal | 14–30 days | $3,000–$8,000 | Home is uninhabitable |
On the 40-pad / 35% POH example above, converting 12 POH to TOH over 18 months required $72,000 in home disposition budget ($6K avg per unit) — funded from bridge holdback, not operating cash flow. Parks that skip this budget line run out of capital at unit 8.
Lender sensitivity — how POH ratio changes bridge terms
| POH ratio | Typical bridge LTV | Holdback for home CapEx | Agency exit |
|---|---|---|---|
| 0%–5% | 70%–75% | Infrastructure only | Freddie/Fannie eligible |
| 6%–15% | 65%–70% | Home + infrastructure | Fannie may qualify |
| 16%–25% | 60%–65% | Heavy home budget | Fannie only (verify guide) |
| 26%+ | 55%–60% | Conversion required | Community bank exit |
Bridge lenders who fund 35% POH without a written conversion schedule are either pricing risk into rate or have not underwritten your refi exit. Ask for agency gate confirmation in writing before close.
DSCR modeling difference — side-by-side on same park
Same 40-pad park, $920K purchase, 74% occupancy:
| Pro forma line | TOH-only (26 pads TOH, 14 POH) | Fully converted TOH |
|---|---|---|
| Gross rent | $298,000/yr | $248,000/yr (lot rent only) |
| Vacancy | 18% blended | 8% |
| Maintenance | $67,200/yr | $28,000/yr |
| NOI | $118,000 | $168,000 |
| Implied value at 8% cap | $1,475,000 | $2,100,000 |
| Exit cap rate (agency) | N/A — ineligible | 6.5%–7.5% |
POH gross rent inflates top-line but compresses NOI margin — agency underwriters strip POH home rent and value land + infrastructure income only. That is why conversion unlocks $625K+ in value on this example even though gross rent drops.
Due diligence items specific to POH parks
Before LOI on a heavy-POH park, request:
- Home inventory schedule — year, size, condition, tenant name per POH unit
- Title status on each home — park-owned vs lease-to-own vs abandoned
- 12-month home turnover log — vacancy days between POH tenants
- Habitability inspection reports — county enforcement history
- Utility allocation — who pays electric/gas on POH units (park vs tenant)
Missing item #3 is the most common reason bridge lenders retrade LTV at final underwriting — turnover cost was never modeled.
State market guides
Risks
- Home abandonment — removal cost $3K–$8K per unit
- Habitability lawsuits — POH landlord liability
- Agency surprise — refi denied at high POH ratio
- Rent control — rare but caps lot-rent upside
- Well/septic — limits agency regardless of TOH mix
Refi gate checklist (agency vs bank)
Before month 12 on bridge, confirm:
- Occupancy % — 80%+ for Freddie target
- POH ratio — under 5%–25% per agency
- DSCR — 1.25x+ on trailing NOI
- Utilities — city water/sewer or bank waiver
- Loan size — $3M+ for Fannie/Freddie MHC
Miss one gate → community bank exit instead — still viable, model lower proceeds.
Nationwide MHC bridge: manufactured home community financing.
Related
POH-heavy parks are financeable on bridge with a credible TOH conversion plan — without it, refi options narrow sharply.
POH vs TOH — How Lenders Underwrite Mobile Home Parks — next step (2026)
Qualified non-owner-occupied files run 8.99%–13.5% IO bridge and 5.75%–10.5% DSCR when exit and comps are documented at submission.
Submit scenario · Pre-qualify · (833) 264-7776.