Financial Analysis

[Richard Haiber]

Just looking to see what financial qualifications some of you look for in a MHP (not individual MHs).

Looking to see what you might find acceptable in deals of your own for the following important factors:

1) cap rate

2) grm

3) dscr

4) cash roi

5) total roi

It'd probably be helpful as well if you could state some info about the following aspects of your park to put things in perspective:

1) number of tenant-owned MHs

2) number of POHs

3) the city/market your park is located

[Curt Smith]

Hi Richard.  I recommend you go to mobile home university's boot camp.  Excellent and worth every penny.  mobilehomeuniversity.com

At least 30 paying pads, all lot rent, no POH, no wells or lagoons.  Must be city water, septic per pad not good but can't eliminate entirely it seems.  City sewer is best of course.  No park paid water.   Prefer 80% occupancy or close so it's refinancable.

25% cash on cash or higher.  Just not worth your time if lower.  Cap rate that's a given is 10% but you leverage up with 80% seller financing at some interest rate and a balloon much longer than 5 yrs.  A 5 yr balloon is very difficult to refi in.  You are better off with a 7yr or 10 yr balloon.  Tell the seller that seller take backs on a 5 yr balloon are high and that you don't want to loose the park due to financing taking longer.

Many variables re expenses IE is a park manager priced in or is the current owner managing.  This may kill the deal if you add in a manaager and the seller is pricing the cap rate including his free managing.  Lots of places a buyer can get screwed especially if POH and well etc.

[Richard Haiber]

Originally posted by @Curt Smith:

Hi Richard.  I recommend you go to mobile home university's boot camp.  Excellent and worth every penny.  mobilehomeuniversity.com

At least 30 paying pads, all lot rent, no POH, no wells or lagoons.  Must be city water, septic per pad not good but can't eliminate entirely it seems.  City sewer is best of course.  No park paid water.   Prefer 80% occupancy or close so it's refinancable.

25% cash on cash or higher.  Just not worth your time if lower.  Cap rate that's a given is 10% but you leverage up with 80% seller financing at some interest rate and a balloon much longer than 5 yrs.  A 5 yr balloon is very difficult to refi in.  You are better off with a 7yr or 10 yr balloon.  Tell the seller that seller take backs on a 5 yr balloon are high and that you don't want to loose the park due to financing taking longer.

Many variables re expenses IE is a park manager priced in or is the current owner managing.  This may kill the deal if you add in a manaager and the seller is pricing the cap rate including his free managing.  Lots of places a buyer can get screwed especially if POH and well etc.

Not interested in anything as small as 30 lots. 100+ is desirable, with anything smaller preferably being a home run deal (and close to home). Thinking of owning a small park far from home isn't appealing. I also have no interest in private well/septic systems. Tenant-paid water is also desirable but if I have an opportunity to add value through sub-metering and tenant bill back it could still be worth considering.

Theres also no interest in POHs. Bf the deal is right, its not an absolute killer and it would be priced into the deal. The goal would be to sell the MHs and make it as close to 100% lot rent as possible. For instance, if I look at a park with 100 lots and 18 POHs. I'm not going to pass on that deal without considering the possibility to sell POHs to tenants or investors after my purchase. If I filtered my searches and had no leniency in the criteria it seems like a deal could never be made. But you are right there are things that make a property a no-deal. But sometimes you have to give and take during the deal-making process with a calculation of your risks and then make the changes to the property that you see fit to create value in it.

The goal of the thread was to inquire from people who have experience owning parks and what kind of numbers theyre seeing from their properties. Do you have any park ownership experience with numbers to share?

Thanks for the response and I'll definitely keep those things in mind!