Hey all!
First like to intro myself and say how great this forum is...
Has any of you bought or currently own any mobile home parks? Can you give me any experience details? I've been hearing that they can cash-flow really well. I own acres vacant land south of the Grand Canyon in a tiny town called Valle. There are some mobile home parks around there and it gave me some ideas :idea:
Also have a good friend looking to buys some value added parks and I'm interested in partnering up with her.
I have a 125 lot park for sale at a true 10cap with actual s. The lot prices are 35 under what they should be. Let me know. Send me an e-mail. :mrgreen:
Sean,
I am pretty experienced in the area of investing in mobile home parks. I have bought 4, and have another under contract. I buy parks that have upside in some way, pad rent, expenses or mis management issues. So my strategy is great if you understand how to add value, and would be brain damage for a more casual investor looking for a property with stabilized income. Let me post a example:
I bough a park in Southern Colorado which was 40 spaces, $180 for pad rent, the park paid water/sewer/trash. The local market was closer to $250 for pad rent and the local market also was sub metering waster/sewer and charging back for trash. The water/sewer bills were about $45,000 annually. So I bought the property for $450,000. In the first 60 days I put in water meters, hired a on site manager and implemented a pad rent increase to $220 monthly. I had 2 abandon homes which I bonded for title on, had a rehab done and sold on notes. Over the course of the rest of that first year I pulled in two more homes, sold them on payments and had another pad fill from another park in town. At the one year mark I raised pad rent to $240 per month, and now have 39 pads full. I will probably fill the last pad sometime in the next 60 days, and sell the home on payments. The park today is worth about $930,000 on a 11 CAP, which is about right for that part of Colorado. With the last pad full it should settle right at $950,000. It cash flows very well because I eliminated the water/sewer expense, and have bumped pad rents by $60 per pad. So I can keep it and let it cash flow, or sell it and 1031x the $500,000 it has gone up in value...
I hear the question coming, is that kind of return typical? The answer is, it can be depending on what your buying, how well you do your due diligence, how picky you are on the deals you pull the trigger on, how skillfully you manage the parks etc.
I see my good friend Jim posted a good reply and I can vouch for the park he has in Colorado as we owned it together until he bought my interest out.
As for your question. Mobile Home Parks can be great investments as other types of real estate. However, the big thing with parks is that you can actually cash flow from day one and sometimes that cash flow can be significant.
However, buidling a new park is probably not the answer. I have purchased over 60 mobile home parks and about 1/2 of them cash flowed from day one. The other 1/2 of them involved some type of turnaround situation. The turnaround can take a lot of extra money so you need to recognize what type of park you are getting into.
The logical first step is to read as much info out there on the subject as you can, drive through parks, practice evaluating them, and if you are serious invest in some of the books and courses on the business.
After trying SFRs, Apts and MHPs, the MHPs win hands down.
Turnover alone on an apartment complex with one bedroom apartments will kill you. MHs do not move around too much unless an investor buys it and moves it to other land or MHP.
Apr 07 '09, 11:08 AM
