strategy for MHP w/ 60s and 70s POH
Hey all, I need some feedback. I have a seller with 7 POH (60s and 70s age) and 1 house all on one parcel. 4 mobiles rented, 1 owner occupied, 2 vacant for years,2 additional pads with water/sewer/power ready to go.
Rents are very low ($325-550) Owners pay sewer, water, trash, lawn. So they haven’t made money on this in a long time.
1. I believe when valuing this I won’t put any value on the trailers bc they are so old? Owner has stated several times that only necessary maintenance was done, nothing more. They’re old and outdated.
2. Best plan of action with current tenants? My thought is purchase, increase rents and place on a 12 month lease stating the new lot rent, end of 12 months give them title to trailer and collect lot rent. If they don't want the trailer, at this point I would decide to keep or trash it.
3. I know I have to submeter water and sewer. I think best/easiest option would to be have a tenant or property manager read them each month for me? Its city water and sewer. Im not sure what it costs to have all the homes submetered.
4. Vacant homes-if its worth Reno, then find a tenant and set up as rent to own. I wouldn't necessarily want to pay to have it hauled off.
5. Bring in used mobiles for additional pads.
Seller doesn't seem to have any idea of how to value the park and she knows it needs work and seems like she will be flexible with finance terms but she doesn't want to hold for 20-30 years so it would be a balloon payment at the end. Obviously best option is zero down and save my capital for getting the park up to date and functioning better. Master lease w/option isn't feasible because I couldn't get mobiles on the additional pads until I owned the park.
Asking $235k. Im figuring a value around $196k before adding in value of the house which is older than the mobiles (which hasn't been updated at all in about 10 years).
Gross income RIGHT NOW is $29,400. I assume 40% op expenses (is this low considering the age of mobiles?) puts it around $17650 net.
What are your thoughts? Is it better to steer clear of old mobiles like this? What should I be hesitant on. Ultimate goal would be to get to all TOH or at least majority tenant owned homes.
I'm new in this niche and appreciate any feedback.