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Mobile Home Park Investing

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Chris Ashley
  • Investor
  • Plattsburgh, NY
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22 unit Mobile Home Park for 250K-Is this a good deal, advice?

Chris Ashley
  • Investor
  • Plattsburgh, NY
Posted Jun 21 2016, 19:13

Hi, 

Recently my offer was accepted on a 22 unit MHP . It's taken a long time. Park owner filed bankruptcy, he's been out of picture and i've been negotiating directly with bank. When owner left town he didn't leave any financial/tax records so I've had to do some leg work/investigating to ascertain financials. I've done this by talking with current property mgt. Co. and knocking on doors of MHP with my realtor? Current PM of 10 yrs has been very helpful as he'd like to stay on for new owner (me) and i believe he's been honest with current scenario and showed me rent roll collecting for bank. My real estate broker has been very helpful as well, he owns several parks of his own and is well respected in community-he came highly recommended for MHP investing. He says this is a steal. However, i was hoping to get some additional perspective as it can't hurt, I don't want to miss anything.

here's offer bank accepted:

250K purchase w/ 20% down. I have a good financial profile and excellent credit. I haven't discussed additional terms with bank (interest rate, term, fees, etc.)

1. I don't want to get a bad deal on the back end of this deal with financing. Any watch outs, pitfalls and general guidelines when negotiating with bank for MHP loan? Acceptable terms, rates, interest rates, etc-any advice? As i don't have previous years tax returns for park, it limits my options and that's why i'm talking with bank that owns current mortgage as they are willing to be flexible and motivated by current owners bankruptcy. 

About the park:

22 units total.

15 rented and paying at $275 mo. lot rent. All long term tenants. (15X$275=$4,125 mo.)

1 vacant pad (needs trailer)

2 delinquent tenants

PM says one needs to be evicted and other always pays when he gets taxes back for last 9 yrs but I'm counting that as a vacancy

1 lot that has newer century 21 trailer on it for sale that's not paying lot rent

How does this work, how do i get this company to pay lot rent?

3 lots with vacant trailers that come with sale (2 of which need serious rehab)

with rehab, PM says i should get $600 a mo. per owned trailer

Would you keep ownership of trailers or sell trailers and only collect lot rent?

Considering purchase price of $250 w/ 20% down-assuming 15yr at 5% loan-Is this a good deal at where MHP park sits today with vacancy's?

Expenses paid by landlord (bookkeeping, taxes, PM fee, snow/lawn, utilities, maint., insurance, water/sewer)=$17,355 annually. numbers provided by PM. Public water. Septic systems. tenants pay own trash and water. Am i missing expenses or should i add in $ for potential additional costs, what are they?

of note, I have an old appraisal from 11/2013 of $375 but this is when park was fully rented. i've been told vacancy increased over last 18months due to owner leaving.

The good, the bad and the ugly? What should i be looking out for? What am i missing? Thank you all in advance for your considerations and time.

Best regards, 

Chris-

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