Has anyone ever developed raw land into a mobile home park in the Austin, TX area? We come across land deals from time to time and wanted to see what types of expenses typically go into getting the land ready (zoning, utility taps, roads, etc.). Does anyone know of any good books, websites, etc. that specialize in this type of development?
John Fedro might be able to help you out.
Zoning is the first hurdle. If it's inside any city limits, you can almost bet it will not be approved. If it is in the city's EJT (Extra Jurisdictional Territory) the neighbors will try to block you out. There is a great site called municode that has all the municipal codes including restrictions on Mobile Homes, Parks, etc. You would be surprised how little freedom you have over land that you own.
Talk to the local zoning and permit officials immediately. If by some miracle they allow a MHP to be developed, then you can start to work on plans and a development budget. Some general guidelines: $15- $20k per pad for utilities (water/sewer/electric) and then there are the road coasts. Utility taps for multifamily are exponential and if it is truly raw land then ridiculous prices to have the electric company put in the big poles to service the park. Again, municode will have the exact specs on how wide a public road needs to be if one-way or two-way as well as the exact candlelight strength for public lighting. You're building a small city so costs are figured accordingly.
Most Mom & Pop MHP were developed over years with little government oversight so they often got away with much more than you can now days. Always, always, ALWAYS do your due diligence before you buy the land. We've seen several folks get burned on cheap land deals only to find out later they cannot have more than 2 water/sewer taps per deeded lot or that the land cannot be re-platted or subdivided to allow for more density. In the Houston area the local utility districts are out of capacity for water and cannot permit any new parks or multifamily development. Yet, I still want to build a park! If the numbers make sense, then it can work but prepared for a long ROI not a quick turnaround or flip.
I have a client in Lockhart selling something similar. He put 3 double wide homes on an ETJ 10 acre lot. In that county we can have a maximum of 1 structure per acre based on the sanitation limitations. So 10 double wides would be the maximum. We also have deed restrictions limiting the structures to double wide only. so we can't add single wide units.
His development Costs break out like this:
1. Used Double Wide $25K each
2. Delivery $5K per unit
3. Site prep $2500 per unit
4. Electric Pole $1500 per unit
5. Septic Install (1/2 unit). $4000 (we can use one septic tank for 2 units).
6. Water Lines, water meters, Road access: I think he has about $20K invested for the site.
7. Land Cost $60K for 10 acres
Challenges we've faced:
- Flag lot doesn't allow for subdivide
- Financing is tricky (20 year amortization and 75% LTV are typical
Renting them has been very easy. He's getting $800-$850 per unit and I've seen up to $950 per month in the area.
In Travis and Williamson counties I have not been able to make the numbers work for a MHP. Bell, Burnet and Milam counties are much more flexible and refreshingly easy to work with. It is tough to get a MHP to be profitable when faced with 1.0+ acre lots. (More dirt, longer service lines, longer roads, etc.)
Surprisingly, RV parks fall under different guidelines for septic allowing a much higher density that produces a solid ROI.
Here is why you should never build a mobile home park from scratch:
Thanks for all the reply's, I appreciate the feedback.
Great feedback from Belinda and Scott without a doubt. Zoning, knowing your area, and your realistic exit strategy is key to getting started in your due diligence process.
I would love to add some extra comments however I only like to teach and comment on what I know. My decade of experience is all in dealing with already-existing mobile home parks and individual mobile home investing. If you have any questions once you get the homes in place I would be more than happy to help.
The Austin and/or surrounding areas would be a great fit for another park. Please keep us in the loop as we would love to hear your progress.
I'm sure you'll have no problem renting or selling homes in the area. In fact if you need some homes moved into your future park and are willing to give some move-in incentives I would be happy to help fill your park with used mobiles. :) However, first things first and keep moving forward.
All the best,
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