Hey Bigger Pockets Family,
My partner and I are preparing to close this week on a small mobile home park in Midland, TX. This will be a first for us both and I wanted to get your feedback and experience in owning and running a MHP. It has 23 lots, and is mixed with 9 RV spots.The park is pretty run down, as the previous owner is an older gentleman and hasn't even raised lot rent for about 5 years. Lot rent is about 100% under market rate. All Mobile Homes are owned by the respective tenants, although 2 are being sublet, and not a single tenant is under any type of lease agreement. There is also a small efficiency apartment on the property that comes with the sale. We don't want to hire a property management company, as we would rather find someone willing to live rent free on the property and collect rent, and keep up the grounds.
Currently 85% occupied.
- We have plans to put about 50k in repairs, as well as use a portion of that 50k to put 1-2 newer mobile mobile homes on the property. Items on the agenda are:
- - pave road going through property
- - light landscape work
- - build perimeter fence
- - clean debris around park
- - set actual gravel pads where RV's will go
- - acquire newer MH's at wholesale price to owner finance to new tenants
- - add extra security lighting and cameras to property
- Any and all advice is welcome!
Wow, given what happened to the oil market and thus the Midland property market over the last 5 years, I can't believe lot rent hadn't been increased that whole time. Congrats!
Hey @Joseph Gonzales
Congrats on the acquisition!
I would at least double the budget. It might be possible, if the park is really tiny, to do all of the renovations you mentioned for around $50k. However, bringing in two newer homes alone will cost you about that much. Paving could easily cost that much, depending on the size of the park.
Please, do correct me if I am wrong here and you all have already gotten quotes on everything (should have during DD) and it comes out to $50k.
Happy to chat further about MHP anytime. Just shoot me a message!
@Joseph Gonzales I would echo what @Brenden Mitchum stated above. Pavement could cost 50k alone. So could the 2 newer homes. But keep in mind, if your plan is to sell the 2 homes to new residents, you could get all of that capital back in your pocket to use again.
If you want to be as efficient as possible, do your best to recycle the capital from the homes and then use it again to complete the other repairs. However, if you have the resources available, I would complete all the repairs to the park right out of the gate, since that could help you attract better residents and therefore an easier home sales experience.
Also, consider you may need to solve the sublet home situation. It is rarely a good thing to have homes in the park sublet. You don't have any control of the tenants in those homes since they are not leasing from you. It can work if you are lucky and have a great owner that is subletting, but just be prepared to solve that.
Congrats to you!
Congratulations on your acquisition @Joseph Gonzales . I like that idea of putting someone to live rent-free and be the handyman there. I would just recommend you to be careful about choosing this person to don't become an extra problem.
What´s the average lot rent in your area? Will you be able to double the value right away or you going to need to do it at different times (have you checked already all the leases)?
If you could find good and cheap MH in your area you should buy the two as you mentioned (to stay within your budget).
Otherwise, I would recommend to do the other improvements, raise the rents, save some money, and then buy the two MH you want to.
Not long ago I actually lived in a Mobile Home and RV park in Dallas. The manager and owner befriended me and I became the maintenance man and fill in manager. There was no lease agreement, which caused problems in the area of eviction. The roads were unpaved with several pot holes. One tenant was injured due to a pot hole and filled suit against the owner which was very costly. First thing I'd do is create a lease agreement, secondly, pave the roads and parking areas. New management attempted to raise the rent of current tenants but was legally unable to do so, Grandfather clause of law I believe it was. Therefore they began finding ways to evict current tenants, rent to new tenants at a much higher cost. I would not purchase any mobile homes for resale. Rental homes maybe. Over time tenants will leave their mobile homes and RV's behind and you will become the owner. Several of the mobile homes that where abandoned had to be demolished however. Also mobile homes decrease in value. Concreate slabs for the mobile homes and RV's are a good idea also. In my area, mobile homes sink into the ground and need to be releveled at least twice a year. Currently I own the land where my mobile home sets, today I have to relevel it for the fourth time because it sets on crushed concreate. I wish I had read a post like yours about four years ago because I would be interested in becoming the manager.
As for building a fence around the property and installing cameras, good idea but I'd wait and do so a little at a time as the property begins to bring in capitol. Good luck.