Skip to content
Real Estate Deal Analysis & Advice

User Stats

350
Posts
230
Votes
Paul Choate
Pro Member
  • Attorney
  • Shawnee, OK
230
Votes |
350
Posts

Bought a Trailer Park at auction- feeling a little nervous....

Paul Choate
Pro Member
  • Attorney
  • Shawnee, OK
Posted Aug 10 2014, 11:01

I had been powering through bp podcasts and feeling my oats, so yesterday I went to an auction of a small trailer park just to see what it would go for. (I had previously seen it with the broker but they were asking too much.) I ended up signing a contract on it. I am feeling a little nervous and so I wanted to see if I am missing some angles.

Quickly about me- primary occupation attorney, started investing in 2006 I have 13 units of my own (9 SFR, 2 duplexes) and manage/own 4 SFR with a partner, we have also done two flips this year.

The deal- The auction did not go high enough to meet the reserve but I was high bidder and worked out an owner financed deal- $70,000 purchase, 20% down, balance financed by owner at 6% over 15 years. The trailer park is located outside a small town in Central Oklahoma. 21 spaces, 9 park owned single wides, 1 park owned double wide, 1 2500 sq ft owner's home all on 11 acres which includes a lagoon. There are no other trailers in the park (i.e. space renters). Currently 7 of the single wides and the double wide are rented out. Everything is run down and in poor shape. The owner is 80+ years old and has not been able to keep up with the place. I have looked at the two trailers which are not rented and the main home and they are going to need about $5,000 total to get rental ready. I have not seen the occupied ones. The owner does not have good records so I am taking it based on what I see. This is purely a cash flow play, I don't expect much appreciation. 

The payment is less than $500 per month, taxes and insurance are about $150 (not insuring the single wide trailers- they are not worth it). Taxes are cheap because it is probably still zoned agricultural. Should not change too much with this purchase price. 

Current rents-

Double Wide - $450

7 single wides - $300 each

Total - $2550 gross

Additional income after repairs- Main house $500, 2 singles $600

I assume it is going to take a year or so to stabilize the park after it was so run down. I am also going to be a little tight on cash because of the down payment and fix up costs. This is going to almost double my management time/costs. I am trying to move into real estate investing full-time so that is o.k. for a time. Any advice on making the transition from two full time jobs would be great!

Anything I am missing?

Thanks!

Loading replies...