I'm considering buying a mobile home park. It is in a great location between two small cities, 1 five minutes away and 1 ten minutes away. It's a relatively newer development built around 2000. And all homes are modern (vinyl, shingle). There are 34 acres plotted for 150 spaces and raw land value is 250k. All electric is 200 amp services and water sewer are municipal.
33 spaces are rented
22 of the 33 rented spaces are owned by the park and rented between $7-900 mo. 70%of roads are complete. Total gross rents currently are 16k mo. Based on this info what would you offer or what other questions would you have?
where is the property? In Ohio?
150 spaces but only 33 are occupied and most are park owned. The rent you quoted is the rent for the unit which has its own maintenance costs and some for the lot. You want to know what the lot rent is - maybe 200/month? Times the 33 occupied lots times 12 for annual income. City water and sewer systems about 30-35 percent expense ratio. Why are there so many vacant lotsif it's in such a great location and been around since 2000? Why is only 70 percent paved? You will pay to complete to infrastructure eventually which costs $$. Having new homes is great on paper but those houses may not be payed off so actually having older homes works better for you as a park owner because most homes built Before the 80s are free and clear.
Hi Jeff, Thanks for the reply. The park developer got sick and handed it over to his son. It has never been managed for growth since that point. The homes are all paid off, most of them are doublewide, and yes the park is in Ohio. Lot rents are 200 mo. So 200x33x12=79,200 Gross rents on lots only. $194k total annual rents including park owned homes.
basic and quick formula giving a tentative value would give a purchase price offer of about $465000 because the value in the park is the lot rents. if you apply the cap rate to the annual income of $194 you will overpay for this property - and land value is insignificant unless you are buying in coastal communities for re-development. you don't want to own the houses, might as well own an apartment complex if you are responsible for repair and maintenance on most of the homes. mh investing in about owning land - reduce the expenses - park owned homes need to be converted to tenant owned. could be a value add with all the empty lots but will require some capital to bring in homes and sell to tenants. make sure there is a need for affordable housing in the location, what's the population? who are the major employers, median home prices in the area? rent for apartments comparable? may be a reason its so vacant. i wouldn't buy it based on the land value, you are purchasing a cashflow property - you are only concerned about the lot rents.
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