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Mobile Home Park Investing

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Brandon Tarby
  • Investor
  • PA
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Looking for my FIRST MHP - Things to look for?

Brandon Tarby
  • Investor
  • PA
Posted Oct 16 2023, 12:05

I'm looking to purchase my first MHP, what are some things you wish you knew heading into your first purchase? Questions to ask, financing options, things to look for, etc. Was your first MHP close by, or remote?

I'm in SE PA, found a property in western PA, about 4-5 hrs away. It has 19 lots total, 7 park owned homes, 1 RV and 11 vacant spots. Currently on private water/sewer but public is available. At the asking price of $260k and current monthly gross of $6k, it seems like a good deal considering there are a few ways to add value. It has a positive cash flow, even if I had to finance the deal.

Ideally, I'd like something that has all TOH, to avoid that maintenance, but the MHP above has a larger ceiling compared to others I've seen. Thanks for your opinions and thoughts!

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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
Replied Oct 18 2023, 11:04

That may be too small to support a manager but otherwise looks good

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Brandon Tarby
  • Investor
  • PA
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Brandon Tarby
  • Investor
  • PA
Replied Oct 18 2023, 11:21
Quote from @Jordan Moorhead:

That may be too small to support a manager but otherwise looks good


Thanks. Since posting this I've found an off market deal. 25 lot park with room for possible future expansion. 20 TOH occupied, public water and sewer. They're asking $350k, current gross is $5k. As mentioned in my other post which you also graciously posted on, rents are significantly under value. I'm leaning towards this deal rather than the one above, simply because all are TOH and public utilities, which eases my mind being more of a remote owner.
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
Replied Oct 19 2023, 17:29

@Brandon Tarby sounds much better! Be weary of "room for expansion". Any park with extra land says that and it's a lot of work and money if you can even get the city to sign on!

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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
Replied Oct 19 2023, 17:29

@Brandon Tarby what are the lot rents? You said the gross income is only $5000, per month?

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Brandon Tarby
  • Investor
  • PA
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Brandon Tarby
  • Investor
  • PA
Replied Oct 19 2023, 18:41
Quote from @Jordan Moorhead:

@Brandon Tarby what are the lot rents? You said the gross income is only $5000, per month?

@Jordan Moorhead gross monthly rent is $5k, lot rents are $250. Others in the area are between $350-$450/month. And current owner pays the public water/sewer. Lots of room for value add I think  

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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
Replied Oct 20 2023, 14:25
With the limited info I have that doesn't sound like a bad deal! 
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Bonnie Griffin Kaake
Pro Member
  • Real Estate Consultant
  • Denver, CO
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Bonnie Griffin Kaake
Pro Member
  • Real Estate Consultant
  • Denver, CO
Replied Oct 30 2023, 14:39
Quote from @Brandon Tarby:
Quote from @Jordan Moorhead:

That may be too small to support a manager but otherwise looks good


Thanks. Since posting this I've found an off market deal. 25 lot park with room for possible future expansion. 20 TOH occupied, public water and sewer. They're asking $350k, current gross is $5k. As mentioned in my other post which you also graciously posted on, rents are significantly under value. I'm leaning towards this deal rather than the one above, simply because all are TOH and public utilities, which eases my mind being more of a remote owner.
Brandon, No matter which MHP you purchase be sure to get an estimate for cost segregation. You will be amazed at the tax benefits and extra cash-flow that is available on RV parks and MHPs. Why pay more in taxes than you have to pay. There is no cost for an estimate and the best time to do a study is the first year of ownership.

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Brandon Tarby
  • Investor
  • PA
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Brandon Tarby
  • Investor
  • PA
Replied Oct 30 2023, 15:10

Would this apply to a park that only has tenant occupied homes? I’m new to this, could you explain what the purpose and benefit of this study?

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Logan M.
Pro Member
  • Investor
  • Provo, UT
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Logan M.
Pro Member
  • Investor
  • Provo, UT
Replied Nov 8 2023, 10:51
Quote from @Brandon Tarby:

Would this apply to a park that only has tenant occupied homes? I’m new to this, could you explain what the purpose and benefit of this study?


 The purpose is to accelerate your depreciation schedule.

Typically, you depreciate real estate over 27.5 years but this study would allow for let's say carpet to be fully depreciated in four or five years. Those numbers are rough so consult with your CPA.

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Logan M.
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  • Investor
  • Provo, UT
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Logan M.
Pro Member
  • Investor
  • Provo, UT
Replied Nov 8 2023, 10:53

My quick tips for buying parks:

1. Know the condition today

2. Understand the value add opportunities 

3. Create a realistic plan for how you are going to make it happen

Don't buy at market and don't buy properties without value add opportunities.

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Cliff Benner
Tax & Financial Services
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  • Accountant
  • Denver, CO
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Cliff Benner
Tax & Financial Services
Pro Member
  • Accountant
  • Denver, CO
Replied Nov 28 2023, 10:18

Any advice on finding a Property Manager for MHP? Do you let someone live on site for free to manage it and pay them or is it best to hirer a company to manage it?

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Bonnie Griffin Kaake
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  • Real Estate Consultant
  • Denver, CO
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Bonnie Griffin Kaake
Pro Member
  • Real Estate Consultant
  • Denver, CO
Replied Nov 28 2023, 11:05
Quote from @Brandon Tarby:

Would this apply to a park that only has tenant occupied homes? I’m new to this, could you explain what the purpose and benefit of this study?

A lot of your tax benefits are buried in land improvements to provide power, water, and sewer to each unit. In addition, the concrete pads and driveways and parking are great for expedited depreciation. This can give you cash flow instead of paying taxes on the income for some time. It may help you bring the property up-to-date quicker and fill those empty spaces. Estimates are free and will give you what you and your CPA/tax pro what you need to decide how it will fit your specific tax situation. I have done many of these with surprising results.

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Samuel Coronado
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  • Investor
  • Huntsville, AL
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Samuel Coronado
Pro Member
  • Investor
  • Huntsville, AL
Replied Jan 23 2024, 11:09
Quote from @Bonnie Griffin Kaake:
Quote from @Brandon Tarby:

Would this apply to a park that only has tenant occupied homes? I’m new to this, could you explain what the purpose and benefit of this study?

A lot of your tax benefits are buried in land improvements to provide power, water, and sewer to each unit. In addition, the concrete pads and driveways and parking are great for expedited depreciation. This can give you cash flow instead of paying taxes on the income for some time. It may help you bring the property up-to-date quicker and fill those empty spaces. Estimates are free and will give you what you and your CPA/tax pro what you need to decide how it will fit your specific tax situation. I have done many of these with surprising results.

 I am interested in one. I bought my first park late last year and now I am looking at getting a second one and building a third. 

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Bonnie Griffin Kaake
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  • Real Estate Consultant
  • Denver, CO
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Bonnie Griffin Kaake
Pro Member
  • Real Estate Consultant
  • Denver, CO
Replied Jan 23 2024, 13:45

@Samuel Coronado  There are tax benefits that are likely available to you with these park purchases. The best way to find out how much in tax benefits and extra cash flow is available, you will need a no-cost, no obligation cost segregation pre-analysis/estimate. Then you and your CPA/tax professional can review it to decide how a study can benefit your specific tax situation. CSSI and I have done many of these estimates and studies with great results. There are some essential questions that need to be answered to calculate the results you can expect. The sooner you explore these available tax benefits the better. I can help.