I am a seasoned single family investor that has an interest in parks, and put my first one under contract. Would you do this deal?
24 space park, 6 park owned homes liveable, 7 more are not. 100% vacant. Population within 30 minutes is about 30k people. Rural Alabama.
Dirt roads, 10.8 acres. Separate metered utilities.
I bought this for 60k, 10k down, $500/month at 0%.
Would you do this deal?
When you say 100% vacant, are you referring to the all of the homes?
Are there any other parks anywhere close ( where you can compare lot rent and their occupancy)?
Im assuming the water is separately metered metered( city /county water? ) Are you on city sewer or septics?
I personally wouldn't do this but that doesn't mean everyone would . While you don't have much to lose, i think it has to hinge on demand. In a more rural area that is a challenge since you don't have the velocity of people coming in and out like a real busy metro area will. But if you you can get the 6 homes up and running , you are already covering your bills and cash flowing. The rents may be lower too so you have to figure that out. If its not on all city utilities, i think the risk is too great if you are going to have to get into messing with private utilities with this one being the way it is.
If you know your market very well with the SFH and are doing that locally, you should already be tuned into housing demand somewhat .
Did you run a test ad in the paper to see what kind of demand there is for homes in the area? It is a great way to gauge how quickly you can fill the park. Obviously you want to get the livable homes rented out asap before you do anything. If you can't even fill those because of demand you will have a tough time with this park. This is probably the main thing I would be looking at in due diligence before I did anything with this park. Alabama has generally low lot rents as well. Dirt roads will make it tough to finance as an exit strategy.
Assuming this is in city limits - my first call would be to the zoning department to check if the park is grandfathered, and if so, whether a sunset provision has kicked in due to zero occupancy for 12 or 18 months - which could render the property useless as an MHP. Until that is answered, no, I would not do this deal.
If it's outside the city then the other advice on demand, utilities, etc is needed to make a decision.
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