Mobile home park ,Would you buy it?

12 Replies

Let me start by saying this will be my first deal with real estate investing 

I am looking at a mobile home park with 18 pads and 1 house

13 pads are rented so is the house

All mobile homes are tenant owned

The park is on a community  well and water treatment system 

Owner pays water/ sewer/ trash ,and any repairs for house

This sets on 4 acres

Asking price 180000

Gross cash flow 2000.00 per month 

Keep on driving past the park and don't look back.....

because of the cost of private utilities, your better off buying a 13 unit apartment building, 13 single family homes, or something else.

MHP's this small will not hardly make any money.  The only ways i would do this deal was to get this deal with no money down and financed for eternity.  or if the city will pay for connection to city water/sewer and will bill it directly

that is the only way this deal makes sense from a risk/reward prospective.  once those utilities go bad, your not going to be able to sustain the capital expenditure to replace each of the well's or the waste Water treatment system.  what type of waster water treatment system are you looking at???  septic, lagoon, waste water treatment plant...or combination of 2 or 3  of them.

Private utilities are a headache and cost way more per lot to operate than city water/sewer...that is why it normally doesn't make sense financially to buy a private utility park below 50 units or if you have one of the utilities on city.

@Ryan Groene Not sure the type of waste treatment,it looks like a concrete pond in a fenced off area Looking at the profit and loss statements for the past 3 yrs the park total expenses avg 387.00 per month That’s water/sewage and trash pick up , trash is 125.00 per month so I don’t really see the big expense I understand IF the system goes bad it would be expensive but it’s 10 yrs old so I Assume it has some Longevity left
Originally posted by @Ryan Groene :

Keep on driving past the park and don't look back.....

because of the cost of private utilities, your better off buying a 13 unit apartment building, 13 single family homes, or something else.

MHP's this small will not hardly make any money.  The only ways i would do this deal was to get this deal with no money down and financed for eternity.  or if the city will pay for connection to city water/sewer and will bill it directly

that is the only way this deal makes sense from a risk/reward prospective.  once those utilities go bad, your not going to be able to sustain the capital expenditure to replace each of the well's or the waste Water treatment system.  what type of waster water treatment system are you looking at???  septic, lagoon, waste water treatment plant...or combination of 2 or 3  of them.

Private utilities are a headache and cost way more per lot to operate than city water/sewer...that is why it normally doesn't make sense financially to buy a private utility park below 50 units or if you have one of the utilities on city.

 concur I am not a MHP expert I have only owned 5 of them  but the one on private utls was a NIGHT MARE on elm st.. NEVER again.. simply not worth the risk.. 

it could be a waste water treatment plant. Or a sewage lagoon. 

this has a red flag nightmare written all over it.... those numbers are the sellers....and are not how these things are run...

This is not investment advice...but please do more research about private utilities before you purchase this. 

Your going to run closer to 60-70%expense ratio to run this.  Unless the seller is the legal operator on both the well and sewage. It’s going to cost you way more to run. 

You will literally be shoveling sewage to run a treatment plant. And you will be adding chemicals to the well and doing the testing to run it and fill out the paperwork that the state requires. Same goes for sewage. 

@Ryan Groene I am paying a guy $1500 a month to manage 2 waste water plants and 2 drinking water systems.. But my parks are much larger and I am charging $50 a month to each tenant to offset that cost..
Originally posted by @Hai Loc :
@Ryan Groene

I am paying a guy $1500 a month to manage 2 waste water plants and 2 drinking water systems.. But my parks are much larger and I am charging $50 a month to each tenant to offset that cost..

 Not sure if yours are in the US or CA..  But CA is light years ahead of the US in private sewer and water systems. 

that all said.. in the US you have one fail and on these small value parks it can cost as much as the whole park to fix them.. 

so for me city sewer and water is a must..  and the bigger owners I know they have the same criteria.. 

@Jay Hinrichs I echo what others have said. I have a 12 Unit on Septic and it cost me 40k this last year to redo the drainfield and add some tanks... I would only look into a place that is hooked up to city sewer and water.
Originally posted by @Kai Van Leuven:
@Jay Hinrichs

I echo what others have said. I have a 12 Unit on Septic and it cost me 40k this last year to redo the drainfield and add some tanks... I would only look into a place that is hooked up to city sewer and water.

 the one I had in Oregon the drainfield expired IE came to the end of its natural life and I had to not only replace but have a 100% failure area which I had to then finagle with a neighbor had I not been able to do that I would have had to close the park.. 250k is what that cost..

Now in the mid west and deep south were these parks are dime a dozen its not that critical like west coast we have some pretty strict DEQ type regs out this way.. but regardless that was a one and done for me personally.

@Levi Edgy that gross cash flow is way too low for the estimated expenses as well as cap ex. The utilities will eventually fail. Now question. Community water and sewer. Is that owned by the park community or is that a community gov organization that is not owned by the park and services other properties? That answer would determine if I would even entertain the park. If it is owned and operated by the park run. If it is a gov water authority but not county/city then I would have to think about it. But even then the gross seems a little low.

it’s a mom and pop deal they   literally have not raised the lot rent in 15 years

Their Son is selling it 

I was in Negotiations with them but backed out after getting your guys advice 

Thank you to everyone that replied