I bought a ZOO today.. well not quite but a MHP

31 Replies

Bought a park today here in Oregon... I have owned a few before but never one like this.

all 15 MH's are owned by the park plus a sfr and a studio apartment.

Rents are 475 average on the HM's house is 650 studio 350 ...

Gross rents are 6225 a month.. because 3 of the lovely trailers are condemned and have to be dismantled in place.. ( hoping to trade a metal recycling type person for free dismantle and haul off.

Its on City water and sewer I would not have bough it if it had not been.

Purchase price 80k cash close in 3 days ( they are 3 days away from the water being shut off) So cash talks and you know what walks.. 30k in back water bills and a few other code violations and such...

Not sure if I will keep it   its not exactly a trophy property.. but its on the west coast and you cannot live anywhere else for any less money Period monthly rental crap hotels here are 700 to 800 a month... apartments pretty much start at 600..

I think about 8 of the 11 tenants were pretty nice really been there long time had little gardens in front of their units.. but you had some tweaker trash as well. and of course the MH are well just suffice it to say not the best..

Any advice on how to run one of these never really had this kind of asset I was going to pass but I thought what the heck its only 100k I can't go wrong  ( I hope) I would not have bought it if it was not on sewer and water though..

And I do believe I could flip it pretty easy and quickly for a close to double my money type of deal.. which are the kinds I like to do.

@Jay Hinrichs  where the heck did you buy that? Sweethome?

Brings back memories.  1972...

5%+ rule eh?

This post has been removed.

LOL @ "Zoo."

Unfortunately, I have nothing important to add, but you did make me laugh.

@Mike Nuss  

  No where near Alabama Mike.. you can buy these deals all over the Deep south and mid west FYI.  Maybe not as nice as this one.

I will tell you when I see you Monday for my presentation at  your event  :)

I will probably flip it though unless I get very lucky and can get an onsite "manager"

I don't even know what the taxs and insurance are .. but like I said In Oregon you really can't go wrong at that price and it was only 110k all in... for SFR here that would be a very low end house that rents for 900... so at least we are starting off with larger income Even I the worlds worst landlord should be able to at least break even LOL

@Jay Hinrichs  

Looks like a killer deal.

Have you considered trying to sell all the MH's (and bringing in 3 new ones) and holding the paper? Then you're collecting 2 income streams - lot rent + note income. Get the place fully performing and then sell it for hopefully significant value. 

@Bryan R.  

Dodd frank rules would preclude selling the homes as I doubt my "tenants" would qualify under todays rules... I doubt many living in these types of parks all over the US qualify if they qualify they are not going to live in these places by choice.  At least in my mind.

If anything I would just give them the homes so I did not have to maintain them..

Sounds like a nice deal Jay, but I think you should flip it. I know you aren't fond of the drip drip drip of rental income, so cash in now!

@Austin Lee  

  that's what I will do  we will calm down the natives pay all of the fines... do a little sprucing and have a nice bow on it then remarket it.

It is 10 minutes from the University of Oregon so its in the second largest metro area in the state.  The last park I owned was 40 space's and I sold that for just a tad under 2 million. 

Jay, you should really read Trailer Cash by Jamie Smith if you are going to get into MHP :) I would do a rent to own lease with the current tenants so that they have the opportunity to become home owners.

For investors that have been in this business awhile most of us learn IT'S NOT about the total return but how hard do you have to work for that yield and how long will it take to get there?? 

If it was me I would just resale it and move on. If you already have a lot of money no sense having a headache type asset to drag you down.

For someone that asset may look great to start them off but if you already have millions then you do not want intensive type assets with tons of problems for just a little extra yield.

My mom's friend has been in the trailer business over 40 years. At one point I think she had about 100 but has scaled down over the years to 30 something. She is in her late 70's now. I keep telling her to sell out and just do something triple net and forget about it to relax in her golden years.

She gets mad in court because the judge always gives the deadbeat tenants another 3 to 4 weeks to get out. The trailers are paid by the week as the tenants will blow the money if you do not collect each week.  

Originally posted by @Chelsey Jimenez :

Jay, you should really read Trailer Cash by Jamie Smith if you are going to get into MHP :) I would do a rent to own lease with the current tenants so that they have the opportunity to become home owners.

 Jay already addressed that.  That model is dead, if you want to actually comply with the law.

Hi--I don't want to hijack the thread but can someone point to a post or information that explains why doing a rent to own with the tenants is no longer compliant with the law (namely how does Dodd Frank preclude it)? Is this for mobile homes only?

Thank you!

@Joel Owens  

  will end up selling it once I get it stabilized.. no interest in owning long term.. it was just one of those deals were you had a seller that wanted out and through a number out we agreed to it.. and off and running..

DUDE, you got the golden touch! 

I will let my Oregon friend know about your new animal park:)

Updated almost 4 years ago

Tenants just won the MHP owner lottery.

I'm jealous!!!

@Jay Hinrichs  

That sounds more like a 3-ring circus than a zoo ;-)

Way to work your sources!

Despite the Safe Act you can still effectively rent-to-own. The big players are basically renting with rent credits. Kind of like hotel reward points. Every month a tenant pays the rent they get a credit they can use towards the purchase of their home or any other home for sale in the park. So really there is no way you can be charged for generating a mortgage as the credit isn't even tied to one home though in 99% of cases the tenants will use it towards their current home. In all other ways the deal is structured like a regular rental lease with the tenant covering repairs under a certain number (150, 250, whatever, point is to keep you from being nickel and dimed over little trailer repairs, toilets, faucets etc.) and the park owner covers major repairs.

While there is no case-law big dollar attorneys have obviously signed off on it. Point isn't to make money but rather to incentivize continued occupancy and provide the sense of ownership. This system gets you there.    

@George N.  

  If I was going to keep this my preference would be to just give them the homes.. and make the space rent something that would crate value for the park...

And that is probably what I will do with  the better tenants 8 or 9 of them. If I give them the trailer straight away.. and lower the rent they are paying to say 350 a month. they will never leave I will never have to spend a dime on maintanence ( because I will sell within 6 to 9 months ) and the new owner can't screw around with them as long as they pay their space rent.. so I have done what I think is right.. were else could you live all in for 350 a month plus power.. water and sewer paid by park... so if I net lets save all in 300 a month.. times 14  plus the house at 650 and studio at 350 that's 5200 a month minus tax's and insurance and water and sewer  so say 3500 a month on 110k invested.. Not as good as a lot of slum lord stuff in the mid west but out here on the west cost probably pretty good.

I just rented one of my new builds  375k home for 1850 gross !!!

It will be fun to see how it all plays out.

Ya, in this case it's not a big deal but when you're dealing with more expensive homes or bringing in new homes simply giving them away doesn't work out, of course. So power isn't direct billed? If the power (or worse gas) is master metered that's a PIA but with numbers like this plenty of margin.

At that price per lot you can't go wrong with 350 rents but I'm trying to visualize the place. What years are the homes and how big are the lots? What condition are the roads in and what are the sewer lines made of? Oregon isn't all that far from me. :)

@Jay Hinrichs  Wow Jay!  What a deal in that location!  Awesome!  I was just listening to the recent podcast on this and thinking that since we don't have a ton of MH parks in Oregon its something I had never considered.  Intriguing.  Hope all is well with you guys!

@George N.  

  I have no clue on the sewer lines it was must one of those deals that was to good to pass up.. I have no doubt we will find some gotcha's along the way.. but I did check with service providers and it is on city sewer which is very important. the site is small and I do build subdivisions so if I had to replace sewer line and laterals would not be the end of the world .. Asphalt could use a top coat and sealer.. I would say the site is about 3/4 of an acre  about 100 by 300... mobiles are old dumps by and large.. but inside a few I looked at the folks kept them clean.. That's why the homes have to be dismantled in place.. And larger RV type units brought in... not enough space for 2 wide or newer singles.

if the location was a little better I would take them all out and fill it with park models. You know those new one's that look like cabins.. I foreclosed on a park over in Central Oregon and before I wholesaled it.. I had gone down to a MH manufacturer ( we have a few in Oregon) and had made  deal to buy direct... So that is in the back of my mind but I don't think this location would warrant that... If it was a repositioning of a park in a better local I like that play given size constraints of the pads

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