What to look for with MH park

Question

My business partner and I are rehabbers. Been doing it 4 years. We want to move to buy and hold of multi-units. We both have backgrounds in condo and HOA management.

We have an opportunity for a 55 unit MH park (including the land) with on site laundry mat. The purchase price is $1.4M. I'm intrigued mainly because I am following development in the area and believe the land will be worth around $2M+ in about 3-4 years.

The current owner nets around $6K per month. But I believe his rents are low. I think we could increase by $50 per month. Each unit is sub-metered for water. The unit pays their water plus $10. So that's an exte a $550 per month.

We will certainly do our due diligence inspecting everything and our controller will go over the books. Anything in particular we should look for/at?

Account Closed · Answer

Some info that would helpful as a start

Is it 55 units total? If so , how many of those are occupied.Does the park own the homes or the tenants? If the tenants, what is the current lot rent?What kind of sewer system?Also , on the laundromat is that currently rented or is the current owner operating the business ( i.e., will you be getting the business as well....)

Market will be extremely important as well but better not to post that publicly.  You say the rents might be low, what would comparable rent amounts be?

Are the tenants paying for their own gas and electric to their respective providers?

Rachel H. · Answer

Apart from the numbers (the objective), you should also look into the subjective (i.e., the neighborhood, type of clientele, existing residents, etc.). Regarding the laundromat, I hear they're more of a hassle and less of a money maker. I think it has something to do with the maintenance costs as well as the utilities. Best of luck!

Ken Barrett · Answer

Jack hit the main points. I'm a Laundromat guy.

Is it a public laundromat or just one for the park? Are separate records kept? Number of washers and dryers? Vend prices?

Is there a competitor nearby that is bigger, better and cleaner ?