Is it worth developing vacant land for mhp to sell?

Question

Has anyone developed a flat, grassy piece of land and gotten it zoned for mhp, put in septics, slabs, electric hookups etc. and then sell the land as a ready to infiltrate mhp with no mobile homes in it yet? Is this a profitable strategy? Assuming I own all the excavation equipment and can install all the septic tanks myself.

Allan Smith · Answer

If you aren't sure if it's profitable you are not ready yet for this deal. MHPs are very profitable,  but you need to run the numbers.find out what a lot rents for if someone brings their own trailer. Figure out expenses then get your cap rate. Ask brokers in the area what a good cap rate is for that type of asset.

while researching lot rent, seek out demand for something like this. If it's very rural it might not get rented by anyone.

oh and lastly, make sure to run the numbers as if you paid someone to install septic and excavate. Way too much risk in this deal to only get paid as an installer.

Mario Dattilo · Answer

I would develop something else other than a MHP on that land. Look at RV or a get a feasibility study to tell you what the highest and best use is for the land. If I want to buy a MHP I would buy existing. Maybe just sell the land and roll that money into an existing park. Development is a riskier business than buying existing cash flow. if you’re not an experienced developer and For your first mobile home park I’d recommend keeping it simple and doing a deal you know will be profitable.

Matt Devincenzo · Answer

I work as a site civil, and have my own thoughts on why it is very unlikely any new MHP development will work almost anywhere. If you look almost every existing park was built pre about 1975 +/-, maybe a bit after for some areas. The environmental regs changed around that time as well as many local codes like fire access, sewer (preferred over septic due to clean water act), water availability etc.

So when you look at the requirements vs. the value created it becomes financially infeasible...or another development like SFR or a medium density MFR is more feasible. Back when most of these were originally built it was something that was done 'low budget' and then grown with the increased income, but today 'low budget' is probably nearly impossible due to regulation....

Ingvar V. · Answer

I love the idea I am working on something similar.

Nick Adams · Answer

Mario Dattilo, Quick question about feasibility study.. Where would I get this done? And they can accurately tell me what the most profitable form of development would be on a piece of land in a specific location? What else can they do?

Nick Adams · Answer

Thank you all for your feedback. Probably not the best route to go starting out.

Logan M. · Answer

The last two responses are spot on.

I have expanded a community, we doubled the size but the cost to do so was minor compared to the value we were able to create.

The biggest factor is your feasibility schedule. If you are not in a home run area to fill every vacancy quickly I would run.

Is it worth developing vacant land for mhp to sell?

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