Self Storage and Mobil Home Park Pricing

I'm looking at a property with 26 mobil homes, 13 of them park owned, and 53 self storage units. The gross annual income is $130,000 (according to the seller). ...and I have no idea what the expenses are (and I wouldn't trust the sellers numbers if they gave it to me).

What are your thoughts on how much to figure for expenses, and what this property might be worth?

Edited: 06/26/2010 at 05:12AM

Frank Adams

· Loveland, CO

1170 posts
1209 Influence
4 Awards

Icon_minipost May 14 '08, 03:05 AM

I don't really know much about trailer parks, or self storage, but I'm pretty good at analysis, sometimes at algrebra too.

BTW, you're going to have to get some numbers from the guy, don't worry, he'll lie, but all the numbers can be verified.

Here's what my simple analysis come up with;

13A (spot rentals) + 13B (owned homes) + 53C (storage units = $130,000

13 X ($250/month X 12) = $39,000
13 X ($500/month X 12) = $78,000
56 X ($20/month X 12) = $13,440

Gross rents + $130,400

You have to find out what the MARKET RENT for a space is, what the MARKET RENT for a rented trailer is, and what the MARKET RENT for a storage unit is.

Then find out how close he is to market, and how FULL HE IS, and how full he says he is. Expenses can be verified by contacting all appropriate agencies.

How full does the place look?
How NICE does it look?
Does it show " pride of ownership" , on the rented units and the rented spaces.

Depending on how much of your own maintenance you want to do yourself, versus what he's paying you should be able to come pretty close to what the REAL NUMBERS are.

How much does he want for it?

You have to look at how much FREE CASH it throws off if you do NOTHING yourself, and how much of your time you'll have to put in, equipment to buy (snowplow maybe) if you're going to do it yourself.

My general impression when I look at deals like this (I last looked at a park in '83, but I've come close on some 4 plex-8 plex deals) is that the guy selling OVERPAID and is trying to bail himself out at your expense. If he's got enough equity though it can work.

Remember though, you may just be buying a MINIMUM WAGE (or less) job for yourself. However, if every space, is underpriced by $20/month, every trailer underpriced by $50/month and every storage unit underpriced by $5/month, you could easily jump the gross income by (13 X $29 = $260) plus (13 X $50 = $650) plus (56 X $5 = $280) $1190/month or $14,280/year!

That's a nice increase in the gross revenue, but he doesn't have to be a lot underpriced to be that far off. Again, my big thing is that a lot of times you're just buying a (not very well paying) job!

all cash

Edited: 06/26/2010 at 05:12AM

Keith Schulz

Residential Real Estate Agent · Verona, Wisconsin

59 posts
113 Influence
1 Award

Icon_minipost May 15 '08, 12:22 AM

All Cash,
Your numbers are kind of what I was figuring too. I haven't seen this property yet because it's 2 hours away from me. So, I'm trying to determine if it's worth checking out. I'd also need to hire a manager for the property.

Here's what I'm thinking though for expenses:
park owned homes 50% x 78,000 = $39,000
rented lots 25% x $39,000 = $4,875
self storage units 25% x $13,440 = $3,360

Total expenses not including mortgage = $42,360 (or $3,530/month). It seems like this should cover management, plowing, taxes and maintenance, but I really have no experience in mobil homes or storage units, so I'm not sure how close those numbers would be.

Total monthly income = $10,833
- monthly expenses - $3,530
= total left to pay a mortgage = $7,303

The owner is asking $700,000. So if I could obtain a loan at 90%LTV at 8% for 30 years, payments would be $4622/month. Leaving a cashflow of $2681/month. I know commercial loans typically don't go to 90%LTV, but I've heard it can be done on trailer parks and ministorage. Any thoughts? Are my numbers way off? Again, I have no experience in mini storage or trailer parks, so I'm guessing here. Any input, comments or criticism is welcome.

Edited: 06/26/2010 at 05:12AM

Mark McGlothlin

Real Estate Investor · Bozeman, MT

77 posts

Icon_minipost May 16 '08, 10:07 PM

I have a buddy who has a several parks and several long stay RV parks in South Texas. Your expense estimates seem to be within ballpark of what he has talked about, though All Cash has raised very important questions that must be answered. You will have to obtain and verify his expense data - I agree that's a pretty straightforward but potentially time consuming process.

You'd be lucky to obtain 90% LTV financing, but 85% is within reason - we've heard of 85% LTV with only 1.2 DSCR requirements, and apparently seller holds are pretty common with parks, and many funding agencies will allow that.

Keep us informed if you go look at this one.

Edited: 06/26/2010 at 05:12AM

Stephen Dibert

Banker · West Palm Beach, FL

3 posts

Icon_minipost May 25 '08, 08:19 PM

Mark is correct.

Usually they like at least 15% skin in the game when purchasing but like anything else, funding sources give you beter terms if you have a lower LTV. You can get away with 10% down and a 10% seller contribution. Most funding sources are sticklers when it comes to DSCR though. They won't take anything under 1.15. Again, the client will get better terms if the DSCR is higher.

Edited: 06/26/2010 at 05:15AM