Mobile Homes

How to Evaluate Mobile Home Park Investments for Profitability

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If you read my last BiggerPockets Blog article “Will Mobile Home Parks Be the Hottest Real Estate Investment of 2020?,” you’re probably thinking, “OK, I get it. This mobile home park gig seems to be totally worthwhile. But how do I profit in the space with all the recent market and industry changes?”

Good thing you’re here reading this, as the purpose of this article is to teach you exactly that.

You may also be wondering, “If there is more competition than ever in the mobile home park (MHP) space, why are you about to tell us how we can best profit given the current market conditions?”

As I’ve mentioned before, the answer is simple:

  1. I see it as my ethical obligation as a mobile home park investing educator to help point out some of the main ways new MHP investors can minimize pitfalls and maximize profits.
  2. I truly believe we live in a world of abundance, and there are more than enough MHPs for us to all profit from. In all reality, I can be screaming from the treetops and not everyone is going to pursue financial freedom or become a mobile home park investor. I wish financial freedom and living a freedom lifestyle for all of us. Yet some of us are too busy keeping up with the latest sports scores or our favorite TV series on Netflix to take the necessary actions to achieve it. (Clearly, YOU understand the importance of financial freedom. You're dedicating time to reading this article.)
  3. I don’t want new MHP investors to incorrectly evaluate and overpay for MHPs, as this will artificially drive up MHP purchase prices and further compress cap rates, making it harder for MHP deals to pencil out.

Regarding my latter point, I’ve already seen this happen in the MHP space. Newbies have come in un-educated or using evaluation methods from other asset classes, then overpaid and under-performed only to bring those same parks back on the market after losing their hard-earned $$$. Then they expect buyers to pay unreasonable prices to reduce the pain of their loss.

To completely eliminate that from happening is impossible. Yet if you are reading this and you’re wanting to break into the MHP space, I’m glad you will get to know some important ins and outs of profitability before you take on your first or next park.

If you read my previous post, you understand the MHP space on at least a slightly deeper level. (If you didn’t read it, I recommend you start there.)

Now that you’re familiar with the basics of this asset class, let’s dig into how you can navigate profitable mobile home park investments in today’s market. As times and circumstances change, we too need to move with—or even better, stay ahead of—the game. The same old tricks that used to work prior to 2018 do not apply today.

Let’s start off with how we can best avoid pitfalls.

Dos and Don’ts of Evaluating Mobile Home Parks

DO: Use the Correct Evaluation Method

First, and most importantly, do NOT use evaluation methods from other asset classes and think they will successfully transfer to profitable mobile home park investing.

mobile-home

I see this way too often in today’s market where successful self-storage and apartment investors who have been crushing it in those asset classes jump ship, switching to mobile home park investing while using the same evaluation method that they did for their previous asset class.

It is true that much of the general or overall style of investment or ways to manage investments can be similar (especially when compared to self-storage or apartments), yet there are a few main points to look out for when buying and managing a mobile home park.

Related: The 10 Most Common Problems with Older Mobile Homes

DON’T: Apply Cap Rate to Mobile Home Rent

In MHPs, there is always “lot rent” that gets charged to a tenant—regardless of whether they own their home or not. That’s the fee tenants pay to the park owner for essentially parking their home on the land and using the available utilities.

In addition, a tenant who does not own their home (aka lives in a park-owned home, or POH) has to pay “home rent” in addition to lot rent.

When buying a park, we do need to give value to POHs. It's just that we add the value of the homes AFTER we establish the value of the land first. If we incorrectly add home rent to our land value calculation, then apply a cap rate to it, we artificially drive up the purchase price of any given park, which means we overpay and consequently decrease the spread or potential profits left in the deal.

Do NOT apply a cap rate to mobile home rent when evaluating a mobile home park. I can’t drive this home enough.  The mistake of capping home rent income could literally turn an otherwise profitable deal into a mediocre deal—or even worse, a significant financial loss to the buyer.

It's commonly said that in real estate, "You make money when you buy, and you receive that money when you sell." This rule also applies to mobile home parks. There is no quicker path to mobile home park failure than by incorrectly evaluating your purchase price and overpaying.

How to Evaluate a Mobile Home Park

Here are a few general rules of thumb.

Step #1: Land Value Formula

Take the average monthly lot rent—do not include home rent—and multiple that by the number of occupied, paying lots. Do not include delinquent lots. Multiply that by 12 months to annualize the figure.

Then, take that figure and multiply it by your operating income ratio. To do so, convert your operating income ration percentage into a decimal form. For example, 40 percent operating expenses would equate to 60 percent operating income, which is displayed as 0.6.

Divide that by your cap rate. If your cap rate is 8 percent, you’d divide by .08.

This calculation results in your land value (before any necessary immediate repairs).

Average Monthly Lot Rent X Paying Lots X 12 Months X Operating Income Ratio / Cap Rate = Land Value 

Example: $300 Lot Rent X 56 Paying Lots X 12 Months X 0.6 Operating Income / .08 Cap Rate = $1,512,000 Land Value

Step #2: Subtract Immediate Infrastructure Repairs

Now we know the land value before immediate repairs. But what if something needs to be done to the infrastructure in the first 12 months of ownership?

Well, in that case, we need to subtract that from the land value. When we own a mobile home park, for the most part, we are responsible for maintaining roads and underground water and sewer lines. Additionally, if we own private utility systems—like septic, water well, gas, or electric—then we too are responsible for the maintenance of those systems.

investment property, reinvestment, 1031 exchange, calculator

This can be an expensive game to play. Repairing roads or sewer lines can cost tens or hundreds of thousands. Repairing private utility systems can cost upwards of a million dollars. Given these high price points, it’s imperative that we evaluate the likely dollar amount of repairs needed to the park’s infrastructure in the first 12 months of ownership and subtract that off land value.

If, for example, we found out that we had $100,000 in anticipated road repairs and $27,000 in anticipated sewer line repairs (because we followed our four-stage mobile home park investing due diligence plan, as wise investors do), then our evaluation would look like this:

Example: $1,512,000 Land Value – ($100,000 Road Repairs + $27,000 Sewer Line Repairs) = $1,385,000 Land Value with Immediate Repairs Included

Cool, so we got that far. But what if some of the tenants are paying mobile home rent for park-owned homes? That has to have some value, doesn’t it?

Yes. It’s just that we don’t want to apply a cap rate to that number.

Instead, we find the market value of all the park-owned homes and pay 70-80 percent of that market value, as we are buying all the homes in bulk and deserve a sound discount.

Say a park has 56 lots, and 10 of those lots have park-owned homes (which means 46 lots have tenant-owned homes). Then we need to look at the market value of these 10 park-owned homes and only apply 70-80 percent of value to them. For this example, we will use 80 percent.

Example: 10 Park-Owned Homes X $12,000 Market Value = $120,000

$120,000 X 0.8 = $96,000 Park-Owned Home Inventory Value

Now we need to add the park-owned home inventory value to the land value amount to give the true value of the mobile home park.

Example: $1,385,000 Land Value with Immediate Repairs Included + $96,000 Park-Owned Home Inventory Value = $1,481,000 True Value

At this point, you’re a wise MHP purchase price evaluator!

But let’s look at that evaluation again for good measure.

Land Value – Immediate Infrastructure Repairs + 80% of Market Value of the Park-Owned Home Inventory = Purchase Price

You’ve got it. Great!

Now let’s talk about how applying a cap rate to POH rent can falsely inflate the purchase price value.

Related: 6 Ways to Make Money With Mobile Homes on Private Land (an Untapped, Profitable Niche!)

What If I DO Apply Cap Rate to Home Rent?

Let’s say mobile home rent is $250 a month on top of lot rent for tenants who are in a park-owned home. We applied a cap rate to it. In that case, instead of giving our park-owned home inventory a value of $96,000 (like above), it would look like this:

Example: $250 Home Rent X 10 Park-Owned Homes X 12 Months X 0.6 Operating Income / .08 Cap Rate = $225,000 Park-Owned Home Inventory Value

Again this calculation is if based off home rent with cap rate applied.

How Much Money Would We Lose If We Made That Mistake?

Here’s how much you could have overpaid for this park.

Example: $225,000 – $96,000 = $129,000

Said differently, you paid 2.34 times the actual value of the homes.

Imagine if home rents were $400 a month or you had 56 park-owned homes. That would not only eat up much of your potential profits, it also may leave you in the negative.

More Dos and Don’ts of Mobile Home Park Investing

DO: Make Sure to Correctly Evaluate the Risk of Private Utilities

In the MHP space, it’s common to see parks with private utilities. It’s subjective whether to buy a park with private utilities or not due to the risk and management involved in owning private utility systems. This is something you are going to have to weigh the pros and cons of yourself.

Caravan and camping, static home aerial view. Porthmadog holiday

I personally am OK taking on private utilities—as long as I have correctly evaluated their risk cost and reduced that cost from my purchase price. (This falls under the “immediate infrastructure repairs” part of our calculation above.) Nonetheless, if you are considering buying a park with private utilities, you need to correctly evaluate the risk of each system.

If you don’t own private utilities, then you are a glorified parking lot. You only need to maintain underground water and sewer lines and roads. If you are extra lucky, then the city may own and maintain the roads, although that’s a less likely scenario.

On the other hand, if you own private utilities, then you become a glorified utility company. Along with that comes extra management, compliance, and increased liability—and that’s just on the billing side of things. Additionally, if you own private systems, then the park’s responsible if those systems fail or need repair. Consequently, the park is responsible for replacement utilities in the interim. This can cost the park owner tens or hundreds of thousands—or even millions—if you have certain private utilities.

Therefore, when performing due diligence before purchase, make sure to have each system fully evaluated by licensed contractors for best-case, worst-case, and probable-case scenarios.

If your worst-case scenario is potentially being responsible for $100,000 to repair an electrical system, then how will that affect your overall profits? Would it be a deal-killer?

What if the probable case is $30,000 of repairs? Will that kill your annual cash flow for that year? Or would it only make a slight dent in your cash flow?

Either way, each case is specific to the park and systems you are buying, and proper evaluation is required to determine if you can handle the worst case and if you are comfortable if the probable case comes to fruition. Seem like this will kill the deal? Then it’s best to deduct some more off the purchase price to compensate for this risk as needed.

Let’s be real, many mobile home parks are 50-plus years old. Those private utility systems will fail at some point. Don’t buy a hot potato, unless you know you can handle it financially and mentally.

A Real-Life Mobile Home Park Private Utilities Disaster

I had a park in California where we owned the gas system. One of the tenants called the gas provider late at night with concerns there was a gas leak. The gas company came out to inspect, and using their gas-sniffing apparatus, they detected a tiny gas leak the size of a pilot light.

As a result, the gas main was immediately shut off and locked out by the gas company. The entire park was left with no gas for stoves, hot water heaters, or furnaces. We were instructed to repair the leak, have it tested and inspected, and then get the gas turned back on.

Oh, and I forgot to mention, this happened in the dead of winter—when everyone needed these heat sources the most.

Not a biggie, though. It’s only as small as a pilot light, right?

Try pinpointing a pinhole leak in an underground gas system that’s somewhere in a 40-space park, while the gas is not turned on.

We found the general location and started digging until we could inspect the lines in that area. We found the leak and fixed it. The next step was to test the line to confirm no leaks were present.

The funny thing (not so funny for park owners) when testing a gas line repair is that code requires the system to undergo a pressure test. Seems reasonable. But they require we put twice the operating pressure in the system for good measure, which of course can lead to over-pressurizing the system and creating more leaks as a result.

Lucky for me (heavy sarcasm), that was the case. We caused further leaks, again the size of a pinhole, only to leave us playing the find, fix, and test game for two weeks until we finally solved the problem and got the gas back on.

In the meantime, our manager was running around the park day and night, doing her best to take care of everyone and keep them warm. We bought electric heaters, blankets, and electric cooktops for every home. We even purchased medications and supplies for families and hot meals for everyone in the park to compensate for this inconvenience in what seemed like at the time a neverending saga.

Don’t get me wrong, I like excitement. I’d just prefer to keep my surfing exciting and my mobile home park investing nice and boring.

Having that said, we’d evaluated this potential risk up front, we had an emergency plan in place, and we ended up coming out of that relatively unscathed—we were prepared. It was not so much a surprise as an “OK, here’s that thing we anticipated being a possibility. Let’s proceed as planned…”

Things could have gone worse. And we were ready if that were the case, too. Moral of the story: be a wise investor by anticipating and evaluating these utility system risk possibilities to makes sure you can handle them should they ever come to fruition.

Related: 5 Ways Mobile Homes Differ Across the United States

DON’T: Fluff the Numbers

As you can see, there are quite a few numbers in the evaluation of a mobile home park. If you change one of these numbers, then the evaluated purchase price will change. If you change two or more of these numbers, then you can double or triple the evaluated purchase price.

Let’s take the evaluation we did above and change a few of the numbers so we can falsely validate paying for an overpriced park.

Come on, I really want this park and I’m just trying to make the numbers work!”

light turquoise canvas shoe about to step on banana peel on sidewalk

Good job, you’re catching on to my sarcasm by now. Fluffing the numbers is a big no-no, and here’s why.

Say lot rent is $300, and you have 63 tenants. Fifty-six are paying and seven are delinquent, but you ignore this. You evaluate the park assuming 70 percent operating income, even though it’s 60 percent in all actuality. You also use a 7 percent cap rate, when realistically market is 8 percent. Here’s what you get from your (mis)calculation.

Example: $300 Lot Rent X 63 Tenants X 12 Months X 0.7 Operating Income / 0.7 Cap Rate = $2,268,000 Land Value Before Immediate Repairs

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In the first and correct evaluation, we had a land value of $1,512,000. Yet now that we fluffed the numbers (only slightly), we came up with a new land value of $2,268,000. In that case, you’d be paying $756,000 more than needed.

Or, to look at it differently, losing $756,000 in future potential profits.

I get it. You want your first park badly—but don’t veer from the numbers. Numbers don’t lie. If you don’t buy right, then you won’t make worthwhile profits.

If in doubt, be conservative and err toward paying less for a park rather than trying to fluff the numbers to validate paying over. Your time and money are too valuable to waste or lose!

Proper Mobile Home Park Evaluation Summary

  • Don’t apply evaluation methods from other asset classes to mobile home parks.
  • Don’t apply cap rate to home rent.
  • Deduct immediate infrastructure repairs from land value.
  • Add on 80 percent of market value of park-owned homes to get purchase price.
  • Properly evaluate the risk of private utilities and adjust purchase price as necessary.
  • Know your market rents and market cap rates to make sure you’re not overpaying (How? Talk to brokers, other park managers, and tenants in the area to get the stats.)
  • If you are not 100 percent confident about your MHP evaluation, then be sure to get properly educated (or at least get an experienced MHP investor to double-check your evaluation).
  • You make money when you buy a park (correctly), and get paid that money when you sell.

You’re going to invest much of your hard-earned money and dedicate valuable time to each MHP investment. It’s typically a three- to seven-year commitment per park, so make sure you are making it all worth your while!

The Bottom Line

There are many ways to approach MHP purchase criteria. You may decide after reading this article that some of the things I’m down for, may not be a good fit for you (such as lower occupancy parks, high POH count). Nonetheless, these points are things to take into heavy consideration, and I hope you have found it valuable when looking toward your first or next MHP purchase or investment.

If this all sounds like too much work, this article may have helped you realize you’d rather be a passive investor and let someone else do all the heavy lifting. Alternatively, you may have thought of investing passively and now you’re “game on” to give active investing a crack.

Either way, I wish you all the utmost success as an MHP investor. Whichever path you chose, let me know how I can help you along the way.

Questions? Comments?

Let’s talk below!

Bryce Robertson, your "Real Estate Mate," purchased his first mobile home park in 2015 with a net worth of -$50,000, with unseasoned credit and a mere $2,000 in the bank. Once Bryce closed that see...
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    Wenda Kennedy JD from Nikiski, Alaska
    Replied 6 months ago
    My MHP is a full time job -- but, it's also a cash cow.
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Glad to hear you are having success with your park Wenda. My 1st park took up a ton of time too. Now I've got systems in place that help my business run like a smooth oiled machine which free's up my time. I go over this in detail in my A to Z of MHP's - home study course. Let me know if you want any more info on that. Again, I'm glad you are having success as a park owner!
    Ross B Adams
    Replied 6 months ago
    Great article. I like the simple guidelines for MHP valuation. Curious if there is a number or % one should learn towards as a reserve to cover surprise fix's?
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Thanks Ross. If you own no private utilities then roughly $100 per lot per year as cap x reserves. If you own private utilities then you need to evaluate each systems likely case and worst base scenarios and make sure you could cover both should either of them happen. I hope this helps!
    Ross B Adams
    Replied 4 months ago
    It helps! Thank you!
    Curtis Reid
    Replied 6 months ago
    Great article Bryce, very educational and informative. Thanks. Also your mobile home park course has helped me out tremendously and I would highly recommend it to MHP owners/investors.
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Thanks Curtis! I love your enthusiasm and kind words mate. Glad you got a ton out of my course!
    Anna Henson
    Replied 6 months ago
    Mobile home park owners are the worse, they do nothing for their residents but increase the rents. I have lived in this park for 16 yrs in San Diego, Ca. and it is a joke.
    James Shadoan
    Replied 6 months ago
    Hello Anna, I, too, am in San Diego. Are you an RE investor?
    Ricardo A Perez from Hollywood Florida
    Replied 6 months ago
    @Bryce Robertson thank you so much for this article. i am not a MH park investor but, you explanation and break down made it simple to understand.
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Your welcome Ricardo! Glad you got something out of this article. If you ever want to dive deeper into mobile home park investing education let me know. All the best investing in the interim!
    James Henderson
    Replied 6 months ago
    Hello Bryce, great info!! Future mhp investor.
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Glad you like this article James. Do you have a plan in place as a future MHP investor? Are you educated in the MHP investing space? Do you know your purchase criteria? You may very well be all over that and if you are I applaud you. Those are the main things I'd be asking if breaking into the space. Once you know where your going, what it will look like, and how to maximize profits, then getting you first park become's much easier and more exciting...
    Shane Jeanfreau Investor from New Orleans, Louisiana
    Replied 6 months ago
    @Bryce Robertson I have septic tank inspections ( 18 of them for 37 pad park ) next week and I am really nervous. I do not know much about sep tanks so I'm heavily relying on my inspector to give me honest info!
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Shane, this is something you want to feel very comfortable on. If I where you, I'd be getting at least 3 separate contractors to look at your systems and give you their 2 cents. If they all match up then great. If they are varied then you have more research to do. You will want to evaluate, likely case and worst case scenario on those systems and make sure you can handle it mentally and financially should either happen. If anything does fail and you have to upgrade your system, you want to know if your leach field will be OK and grandfathered or if new size requirements would be needed. Private utilities can make or break a deal. Make sure you fully understand what you are getting into, evaluate all risks and make sure their is wiggle room in the deal to handle things if your system goes bad. Septic is the best of a few evils when it comes to private utilities. With 3 good evaluations you should have a pretty clear idea of what you are facing.
    Brenda Pipkins
    Replied 6 months ago
    I recently drove through a MHP that had quite a few old MH's vacant with broken windows and quite a few vacant lots. The roads needed repair. How would these vacant homes be removed, and what what would the potential cost be? Where would they be removed to?
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Tearing down unusable homes costs about $2K. Sometimes that will include dumpster and sometime dumpster is extra. Your demolition contractor will typically get the home ready for demolition (or maybe your maintenance guy can), then break it down into pieces and dispose of it. If paying extra for dumpsters, then make sure the demolisher is conservative when putting waste in the dumper so you can fit more in each dumpster and keep costs down. Check with local authorities to make sure there is no red tape or additional hoops to jump through.
    Sulaiman Shah Real Estate Investor from Staten Island, New York
    Replied 6 months ago
    @Bryce Robertson I found a MHP that had all the numbers provided so I did my evaluation of the park and the evaluation for the park I got was equal to the price listed. The numbers I used are from their document which provides all the numbers including income, expenses, taxes and almost everything else. By looking at the numbers it is providing an absolutely crazy cash on cash return which I don't believe. Can someone help me out with this? Thanks
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    As mentioned in private message, let me know your calculations and metrics and I'll see if there are any red flags. We need to take everything into consideration when evaluating. Alternatively we could go through your evaluation in these comments so everyone can gain from the exercise. Either way is cool with me. Whatever works best for you...
    Sergio Altomare Rental Property Investor from Greater Philadelphia
    Replied 6 months ago
    @Bryce Robertson. Awesome post pal, thanks! Question for you, do you use any software in your underwriting? Thanks again
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Thanks! Not typically, I use the basic method I mentioned above, and I'll use spreadsheets for operational proforma's if need be. I like to keep it as simple as possible and not too complicated.
    Scott Anderson Real Estate Agent from West Hartford, CT
    Replied 6 months ago
    Bryce, another great article. I recently completed Bryce's MHP A to Z course and found it really informative. For anyone that is skeptical, this course offers an education on the entire life-cycle of an MHP deal as well as personal anecdotes from Bryce on his own investing successes and pitfalls. Outside of the online education, he also provides multiple contract templates, operating expense proforma breakdowns, MHP acquisition criteria and a contractor questionnaire document. As an aside, Bryce is also incredibly responsive to any questions I had throughout the course, which was not necessary but very much appreciated. Thanks again Bryce, hope to stay in touch.
    Bryce Robertson Rental Property Investor
    Replied 6 months ago
    Thanks for the positive feedback Scott. Greatly appreciated! Glad you got a ton out of the course. Now, let's get that next park under contract and let me know when you do so I can take a quick look and make sure there are no red flags or anything that needs to be looked at in greater detail...
    Jerry Agbon from Raleigh, NC
    Replied 6 months ago
    Fantastic and informative article. Thanks Bryce for your generosity in sharing this wealth of knowledge about MPH. I've been interested in getting into the MHP investment business for some time now, but have had some reservation. After reading through your first, and then this second article, I now realized I made the right decision not to have taken the plunge, because I was not adequately informed about the asset evaluation method. If I had gone in, I would have been the type of uninformed invest you described, using the multifamily property evaluation method. With that said, for now I think I'll rather be a passive investor in the MHP class asset, instead of being an active investor. I will stay with being an active multifamily investor. Could you recommend some MHP syndicators, for me to evaluate for maybe future investment? Thanks again!
    Bryce Robertson Rental Property Investor
    Replied 4 months ago
    Thanks for your feedback Jerry. You can simply private message me to continue the discussion about passive investments / syndication's. Thanks!
    JOHN DE SOUZA Investor from Arlington, Texas
    Replied 5 months ago
    Hi Bryce- If I understood how you evaluate a park I noticed that 'income' from park owned mobile home or RV is not factored in the offer price that we should make. We should only factor in the value of the park owned units. Is that simply to make the cash flow more conservative? In other words, that cash flow is a bonus to the new buyer or that cash flow may disappear if the renter brings their own unit. Thanks!
    Bryce Robertson Rental Property Investor
    Replied 4 months ago
    G'day John, It's because #1 we wont own those homes forever and if we pay the capped NOI from those homes then we will never recoup costs (or if we do it will take so long it's not worth while.) #2 the homes are only worth market value and nothing more, by applying cap rate to home rent NOI then we end up with an artificially inflated purchase price. Yes this only relates to the purchase price. When figuring our operations then you will include home rent and that will drive up your NOI. Keep in mind, there are cap x costs related to remodeling each home and this can be the achilles heel for park owners. It can totally drain management costs and energy and also drain capital to do so. Sometimes I'll have 20+ home remodels at any given time at a park. It can really add up. Each time a tenant moves or abandons or is evicted the park is responsible to repair or sell the home. It's hard to sell homes that need repair, so it ends up being quicker and more effective to quickly remodel and then sell / rent. To summarize, a home is only worth its market value at most. If you cap your home rent NOI you will lose out financially as there are many hidden costs that have not been calculated for if you do that. I hope this helps.
    Christopher Scott
    Replied 5 months ago
    Bryce, great article! I own a condo and duplex, but have been considering the MHP space. Any advice on finding parks for sale? There are a lot of opinions regarding LoopNet, but I can't seem to find any other place to research MHP's for sale. -Thanks
    Derek Luciano
    Replied 5 months ago
    Great article, Bryce! Intrigued by the article, which led me to your site which led me to your A to Z of MPH's. I ended up taking the online workshop and got a ton out of it. Extremely comprehensive /well rounded and feel strongly about my ability to analyze opportunities, plan to get started and go execute. Kudos!
    Bryce Robertson Rental Property Investor
    Replied 4 months ago
    Your welcome Derek. Glad to hear. Please keep me in the loop as you progress. And remember to reach out when you come across a park that meets your criteria, to claim your free deal review. Thanks!
    Ethen Armstrong Financial Advisor from Erie, PA
    Replied 4 months ago
    Hey Bryce, I am currently looking at purchasing a mobile home park from a mom and pop type owner, the property has all individual sand mound septic units with leech beds, one main meter for the water both covered at park owner expense, all the tenants pay for is gas, electric, and lot rent. How would I look over the utilities to properly determine adequate immediate infrastructure repairs? The difficulty is the owner doesn't want the tenants to know at this point that he is thinking about selling so having contractors etc come in to inspect all of this stuff might cause issues. Any advice would be tremendous, thanks!
    Bryce Robertson Rental Property Investor
    Replied 4 months ago
    Good question. You will need inspections for all private owned systems. You can line them up and then have their onsite contractor say "we are here for routine maintenance" (or something of the like.) They should not be speaking to the tenants anyway. Once you know your best case, worst case and probable case scenarios you can figure out i#1 if you can handle worst case, #2 if you are OK with probable case. Then when looking at your evaluation cap rate, add 1% to the cap rate for each private utility system. i.e. if you wanted to buy at an 8% cap in your market, and there is private septic and private water then you'd be wanting to evaluate closer to a 10% cap rate. Then for any immediate repairs needed to infrastructure in first 12 months of your ownership, that $ amount will need to be deducted from purchase price to compensate, so you don't overpay upfront. I hope this helps!
    Craig Dwyer
    Replied 4 months ago
    Bryce, Terrific article. As a newly empowered investor ready to leave the corporate world for investing I am exactly as you characterized in wanting my first property badly but I am trusting the numbers more than my heart. I have an opportunity for park that is being sold on two completely different parcels 5 miles apart but in the same town. I think my numbers are right but they are way off from the asking price. How would you advise figuring operating income ratio other than using due diligence over seller supplied numbers? Would you be willing to look at the numbers to confirm if I am correct?
    Bryce Robertson Rental Property Investor
    Replied 4 months ago
    G'day Craig, yes I can look over numbers for you. I'll take this to private message so we can discuss further. Thanks.
    Carlos Lopez
    Replied 2 months ago
    HI Bryce, great article, I just have two questions, how do i figure out the operating income ratio , is this the same as NOI? I've googled the term but can't get a clear answer. #2 do you have online resources that go more in depth into analysing and valuing a park to make a purchase? I know you talked about your course for managing the park but I m Just in the beginning stages of evaluating a purchase
    Bryce Robertson Rental Property Investor
    Replied 2 months ago
    To answer your second question: Yes, I do have an online training that's called "A to Z of MHP's - financial freedom through mobile home park investing - Home Study Course" It literally covers everything from: why MHP investing, how to find and evaluate a MHP, how to put under contract and negotiate, my 4 week due diligence schedule, how to avoid risky pitfalls, renegotiation (if needed), new ownership takeover, onsite and offsite management, managing from afar, how to approach small MHP's, airbnb and MHP's, how to maximize profits, all the way through to how you profitably sell a MHP. The course is designed with 16 hours of video training, and about 4 hours of "Wealth Exercises" where students literally put together their own self-designed mobile home park investing business plan to specifically suit their individual circumstances, needs and goals. Then an action plan to see students through to their 1st or next park purchase. The course comes with a full training manual, with example purchase contracts and supporting documents, it also comes with free deal review, where I look over a deal for you to see if there are any red flags, to give you my 2 cents, things to be cautious of, things to take advantage of and my evaluation. The course typically retails for $497, and I'm currently honoring $100 off the course to help out given current economical circumstances (so you only pay $397.) This discount will only apply for a limited time, so private message me if you'd like to take advantage of the discount or if you'd like more info on the course...
    Bryce Robertson Rental Property Investor
    Replied 2 months ago
    G'day Carlos, you are correct. In this calculation, the term OPERATING INCOME is more correctly termed NET OPERATING INCOME. Said basically, if OPERATING EXPENSES are 30%, then NET OPERATING INCOME (NOI) is 70% (as they both add up to 100% of REVENUE.) In more detail, first we begin with REVENUE (this is all income that comes in for the park), then we have OPERATING EXPENSES (these are all the OPERATING costs involved in running the park, this does not include non-operating expenses like capital expenditures), when we SUBTRACT OPERATING EXPENSES from REVENUE we are left with our NET OPERATING INCOME (NOI). Said differently: REVENUE - OPERATING EXPENSES = NET OPERATING INCOME (NOI). If 30% of REVENUE goes to OPERATING EXPENSES, then 70% of REVENUE goes to NET OPERATING INCOME. NOI is pre-taxes and does not include any financing payments. I hope this helps.
    Carlos Lopez
    Replied 2 months ago
    Thank you Bryce for the explanation!