Mobile Home Park Development
I have been considering getting into the development of mobile home parks. A piece of property came up for sale in town that has the right shape for it I think. I have attached a PDF I did earlier today for review.
I have questions on the utilities if someone has been down this road before.
I wanted to do a phased approach to minimize capital and expand as needed. Is this the right thinking? Would it be better to install all utilities in Phase I and the pads as needed?
What could be added to separate this from others in the area? I was thinking playground equipment, basketball goal, stocked pond.
What are things that you overlooked during your development that I should be looking for?
Charles
Your biggest impediment will probably be planning and zoning. Before digging too deep I would research how the municipality would feel about a new mobile home park. Most see a lot of opposition.
Originally posted by @Taylor L.:Your biggest impediment will probably be planning and zoning. Before digging too deep I would research how the municipality would feel about a new mobile home park. Most see a lot of opposition.
Luckily there is no zoning. The city is very easy to deal, but I will get a meeting setup with them first thing.
There is a railroad crossing 1/2 mile away, this has caused me to be a little hesitant.
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If the city has no zoning requirement, what would stop someone from building a park next to yours, and then across the street? What makes mobile home parks valuable is the "moat" of hostile zoning that fends off competition. You will make much more money if you buy an established park with solid existing cash flows at a decent price -- and that type of deal has much lower risk and easy-to-obtain financing.
I've not seen your deal or the location, but I know very few people over the past 25 years who actually made money building parks from scratch (not counting expansions of existing parks). It's very risky, hard to finance, and filling the lots is extremely capital intensive. Just trying to keep you out of trouble potentially.
Originally posted by @Frank Rolfe:If the city has no zoning requirement, what would stop someone from building a park next to yours, and then across the street? What makes mobile home parks valuable is the "moat" of hostile zoning that fends off competition. You will make much more money if you buy an established park with solid existing cash flows at a decent price -- and that type of deal has much lower risk and easy-to-obtain financing.
I've not seen your deal or the location, but I know very few people over the past 25 years who actually made money building parks from scratch (not counting expansions of existing parks). It's very risky, hard to finance, and filling the lots is extremely capital intensive. Just trying to keep you out of trouble potentially.
Frank
All great points and greatly appreciated.
It raises questions for me which is why we post here right.
I have looked at purchasing an existing park even made an offer on one. It didn’t work out.
Development is what I’m comfortable with and it’s what I enjoy really, I guess that’s why I always find myself back to this point.
To your point of competition, that has been a concern of mine always.
I would like to hear your input on the capital intensive items you mention.
Thank you
Charles
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To fill a vacant mobile home lot in a mobile home park, the park owner has to find a used or new home, buy it, pay to prepare the lot for arrival, ship the home, set the home, connect the utilities, install the decks, stairs, skirting, etc. All of this, added together, is going to run about $20,000 to $80,000 right now, based on if the home is new and used and what part of America you're moving the home into. That's a whole lot of capital.
21st Mortgage has a park owner financing program called CASH in which they front you this money with zero out of pocket, but you still have to backstop the loan on the home and if the home goes vacant you have to make the mortgage payment, abate your lot rent, and pay to renovate the home and get it resold.
The bottom line is that filling lots is a lot more capital intensive and risky than building the park itself.
I was never planning to own the actual homes. Just the dirt and maybe that is an issue
Mobile homes fit the demographic pretty well, there is half a dozen mobile home dealerships a short distance away. This may not be a great indicator as I first thought
I am about 100 miles east of Houston.
I’d be happy to share my spreadsheet if you’d like to glance at it. It’s pretty detailed and versatile and may be a useful tool for you if nothing else.
Charles
Quote from @Charles Chester:
I was never planning to own the actual homes. Just the dirt and maybe that is an issue
Mobile homes fit the demographic pretty well, there is half a dozen mobile home dealerships a short distance away. This may not be a great indicator as I first thought
I am about 100 miles east of Houston.
I’d be happy to share my spreadsheet if you’d like to glance at it. It’s pretty detailed and versatile and may be a useful tool for you if nothing else.
Charles
Charles,
Did you end up progressing with this? I have toyed with the idea of building a smallish mobile home park with most if not all tenant-owned homes, but everyone always says buying existing is better than building new. I'd love to see what you've come up with in your research.
Quote from @Adrienne Bryson:We pivoted slightly from the discussion above. I hope that property stays available though.
Quote from @Charles Chester:
I was never planning to own the actual homes. Just the dirt and maybe that is an issue
Mobile homes fit the demographic pretty well, there is half a dozen mobile home dealerships a short distance away. This may not be a great indicator as I first thought
I am about 100 miles east of Houston.
I’d be happy to share my spreadsheet if you’d like to glance at it. It’s pretty detailed and versatile and may be a useful tool for you if nothing else.
Charles
Charles,
Did you end up progressing with this? I have toyed with the idea of building a smallish mobile home park with most if not all tenant-owned homes, but everyone always says buying existing is better than building new. I'd love to see what you've come up with in your research.
We are under contract on a piece of property now and in the DD period.
The reason We changed is due to Chevron and the upcoming expansion planned. We changed to RVs instead of homes for the workers that will be in the area. My goal is to develop and sale I’m not an operator.
A little background on the property. It is an old school house that has been vacant for 15 years or so. There is about 50k sq ft of buildings that need to be demo’d. The structure is in good shape really but the money to convert them to a multi family gets up there. With the price of concrete it is less expensive to tear them down and use the slabs for RV spots.
The property has beautiful live oaks and the connections to the utilities are already there.
The property was listed at 450k I offered 350k we settled in 365k. I have the construction cost broke down in several options. If you’d like more on that let me know.
It will hold just above 100 RVs. With the location being so close to the refinery spots will fetch 550-600 a month. 500 is the going rate it seems.
I will try to document the process as best I can
Here is a snip from my model of the property. The white hatch patterns represent existing buildings or concrete. Blue & green are RV spaces. 20x40 each. This is complete build out and best case. There are a couple of spots that need to be omitted that are not practical. The outcome of the asbestos survey and inspections will determine which building if any we can reno for office, laundromat & common areas.
Quote from @Charles Chester:
Here is a snip from my model of the property. The white hatch patterns represent existing buildings or concrete. Blue & green are RV spaces. 20x40 each. This is complete build out and best case. There are a couple of spots that need to be omitted that are not practical. The outcome of the asbestos survey and inspections will determine which building if any we can reno for office, laundromat & common areas.
I know your drawing is not to scale but looks like those in the middle should be pull-throughs instead of 2 back-ins. Keep in mind you need a setback from the property line. Even if there is no ordinance there. You dont want to get into legal trouble. Generally, the minimum would be 10' for most places but 15' is probably preferred.
Keep in mind that 20x40 is usually the concrete pad space. Most codes require a 5' setback from that pad on all 4 sides. So the actual "space" would be 30'x50'.
Now, that is out of the way, I have been RVing for a while. I was a road warrior at work. If I ever came up on a cramped park, I would go on to the next one. I think it is better to concentrate on quality instead of quantity. You can charge more per space and get it. You will have much milder and responsible patrons. You will probably make more money in the long run and you will make more on the sale. Just my 2 cents though.
Quote from @Charles Chester:
Here is a snip from my model of the property. The white hatch patterns represent existing buildings or concrete. Blue & green are RV spaces. 20x40 each. This is complete build out and best case. There are a couple of spots that need to be omitted that are not practical. The outcome of the asbestos survey and inspections will determine which building if any we can reno for office, laundromat & common areas.
I know your drawing is not to scale but looks like those in the middle should be pull-throughs instead of 2 back-ins. Keep in mind you need a setback from the property line. Even if there is no ordinance there. You dont want to get into legal trouble. Generally, the minimum would be 10' for most places but 15' is probably preferred.
Keep in mind that 20x40 is usually the concrete pad space. Most codes require a 5' setback from that pad on all 4 sides. So the actual "space" would be 30'x50'.
Now, that is out of the way, I have been RVing for a while. I was a road warrior at work. If I ever came up on a cramped park, I would go on to the next one. I think it is better to concentrate on quality instead of quantity. You can charge more per space and get it. You will have much milder and responsible patrons. You will probably make more money in the long run and you will make more on the sale. Just my 2 cents though.
@Mike Reynolds
I spent a lot of time in the Cherino area.
The interior border is the 20’ setback from the property lines. It is to scale what that scale is in the image im not sure.
I have laid this thing out so many times I have a few with pull throughs. I may be a little congested good point.
I have the roads at 40’ wide. I used a park in Katy as a goby. The West Orange ordinance is pretty lenient.
This is the plan that will be submitted to City Council for approval and permitting.
Mike I took your advice and made all the interior spots pull throughs on Phase II.
With an image overlay. This shows the existing school to be demo'd. The structures are in good shape. I wish converting them to condos/apartments wasnt expensive.
Its been a while so figured I would update this thread. After a lot of time an effort I have to pull the plug on this project. Our original lender pulled out of the deal. I scrambled to find another option. Two other lenders gave me options with the final lender willing but with a larger cash injection than I was comfortable with.
@Frank Rolfe was right and I should have listened a little more. It was naive or ignorant of me to think with 20% down and 800+ credit the loan was the last thing to worry about!
The industrial expansion that is planned has still not been publicly announced, so maybe theres a silver lining.
Moving on to the next one