I've found a small mobile home park that may be of interest to me assuming the numbers work out correctly. This would be my first real estate investment. It is a 9 pad park and includes 7 homes in the purchase price. Any suggestions on things to look for when I actually take a look at the property? Do I inspect (or have inspected by an actual inspector) each home? Any thoughts or suggestions would be welcome. Thanks in advance for your input.
I have a small 18 space park but I own the property, rent the space and that is the way I like it. It's not too much fun working on those things once a disgrunteled renter kicks a few holes in the walls etc. If you can buy the park right ( crunch the numbers) and sell the trailers on contract you might come out ok. The problem with parks that have park owned units is you pay more for the property because of the income stream the park owned units produce.
Pencil out what you would make should you sell the park owned coaches at say 10-12% interest figuring you will get some of them back and will be able to re-sell after repairs. If they are old single wides like the ones in my park they sell for 5-8k is all. See also what the park would produce in NOI (income) if you just rented the spaces at the going rate.
The other problem with small park is you lose a space rent to a manager if you don't want to manage it yourself. I give my manager a space and 100 bucks and she is pretty good, but is hinting at a raise.
I posted this somewhere earlier and might answer some more questions:
I live in the Northwest, have several commercial rentals in Washington and a small 18 space mobile home park in Idaho which I have owned for 5 years now. It has been a pretty good investment and just keeps plugging along. There have been some management problems and the usual infrastructure repairs, such as waterlines, sewer lines etc. I am looking for another park but find them almost nonexistent in my stomping grounds, from Western Washington to Northern Idaho. I get a couple flyers monthly from folks wanting to buy mine. They have become extremely popular lately. I have yet to see one with many vacant spots to be filled for future upside that I would buy, not to say they are not out there, but in a couple years of looking I have yet to find any screaming deals in my hunting ground. Self-storage and mobile parks are the hot commodity now.
What I look for in a park is one in a jurisdiction that favors or at least has some favorable safeguards in the statutes for the landlord. Know the statutes for eviction and how it works in your state. If you do trailer parks you will do evictions and these take time. Drill the management for problem tenants and see if the manager is up to snuff. If there is no on site management try to talk to the residents that have the most obvious pride of ownership coaches and get the scoop. A bad manager can allow problem tenants in and cause the good ones to leave the park. And it is a pain to get these problem, tenants out. I've been there and just recently got the last problem tenant out of my park. I screen all new tenants vigorously through a screening co. Look at the park leases closely to see what they allow. These can be changed. Watch out for parks with wells and on septic unless scrupulous records regarding tank pumping and well testing have been provided. Expenses are less with these parks ( city water and sewer is expensive but an asset) so you will actually pay more for the land. Some parks have been forced to go on city water and sewer a short time after a new owner bought in. That is an expensive proposition and can ruin your whole year or worse. Check with the county! Check with the local police to see how much trouble the park has been. Get all water bills and check usage to see if there is any infrastructure problems or contact the water dept to see what the overages if any are. Get as builts if they exist for water and sewer, if not try to determine what condition the lines are in and what repairs have been done. Many of the parks have old problematic infrastructure. Find a park with competitive or low rents for the area. Find a park with a good land upside in the future path of growth. You will pay almost as much for one on the fringes. See if there has been any claims against the park, by contacting some insurance cos that insure parks. Get all financials and study them. Most sellers understate expenses to increase the cap rate. Mobile parks can be a good investment, but you can get hammered too. That's all I can remember off hand and need to go. Good Lick hunting.
Thanks for the reply. If I have additional questions as I go along, would you mind if I contacted you?
No problem [email protected]