My father currently owns a small mobile home park in S.C. 18 units with approximately 13 or 14 livable and rented. The rents average between $364-$375 a month. These I believe are all month to month. He asked me over the weekend what I thought about taking over the park for him. I currently live about an hour or so away from him and the park. I am so new to this, I wouldn't even know where to begin. How can I make this park financially viable for the both of us? The park is in rough shape, however i believe it has potential.
Dave,
I should probably say I really do not believe in the concept of a rental mobile home park except in very rare situations. I am happy to hit on the reasons if you want, but I will keep this post more to the point. In almost every case, a rental park is like a flat apartment complex. So really your needing to look at managing and turnover as huge expenses and time commitments. In almost every case, if you convert the park to the residents owning the homes, your NOI will be better. This is not a universal truth, as every park reflects the local economic conditions.
So I would look at the sourounding space rent, reset my community to the high end of that result, then sell the tenants the homes on terms with no money down and payments that bring your gross back to a number close to what they are paying.
So if the space rents in the area were $200 per month, and the home was at $350.... I would have them pay $200 for the pad, then $150 for the home and figure out a payment plan that was 2 or 3 years long... depending on what you can get away with... shoot for 3, settle for 2. At this time, if I could I would also sub meter utilities if that has not been done. That will further lower your expenses and add accountability on the utility usage part.
Again, not a universal truth, but in most cases that is your best bet...
For what its worth... a stable space rent only park for me, gets a visit every quarter to every half year... so 2, at the most 4 trips per year... maybe a extra trip to my south Texas park in the middle of the winter to just warm my bones, not because I need to visit...
Jim has some good points. Also, you may want to think about how much time and how much you reallly want to get involved - running a mobile home park is a business and it requires time to learn all the ins and outs. Hope that helps!
Jul 26 '09, 08:48 AM
