$129K 7unit MHP - too good to be true?

[Jason Abbott]

This seems too good to be true, so it probably is.  But as I am new to this and my MHP experience is limited, I'd like your opinions and help in asking the right questions to uncover the real facts, dirty details.

 Here is what has been shared so far. 

10 units three of which are slabs without trailers on them and 7 of the slabs have trailers (park owned). Potential to add 4 more slabs.  Park potential of 14 units. 

Currently water and sewer included in rent, collecting $550 per month per rented trailer.

Thoughts?  Thank you in advance for sharing your experience!

Jason

[Curt Smith]

HI Jason, Here's how I'd offer on your deal.  Ignore all empty spaces and acreage.  Only offer on paying pads.  Water/sewer included is bad.  Renters should pay not the park.  Parked owned homes are bad too.  Occupants should own the homes (and maintenance) and park just charge lot rent.

Find the prevailing lot rent for this area.  I'll assume $200 you substitute the real value.

7 paying lots x $200 lot rent x 12 months x 50% expense ratio since park pays utilities = $8400 NOI per year. At 10% cap rate, the offering price is: $84k

As is typical the park owner is way over valuing park owned home rent!!!!!   Park paying utilities is just nutz.  Poor management.

You didn't mention if septic for sewer or well for water.  VS city for both.  If well water drop the expense ratio below 50% maybe by alot.  

Wells have been taged by State enviromental depts to shut down or do crazy daily testing and alot more expense for chlorinators etc.  I wouldn't buy a park with a well certainly not for your first park.

Ah I see you're in FL.  Yes FL's Enviro Dept is cracking down on parks with wells big time.   If this park is on a well, he may be dumping his problem to a dumb buyer.    Call other parks.

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