2 options; is this a good deal

7 Replies

First purchase option:
2.4 million includes 3 new park owned homes that has oceans and sunset views which they rent month to month for roughly 1k each.

Second option
1.8 million and they will sell the 3 park owned homes themselves.

Usually, I wouldn't want to own any of the homes, just the land but this time I'm interested in turning several of the 27 lots into a tiny home vacation rental.

27 spots
Average space rent of $500
$174,808 total gross income from 2016 tax return
Utilities not reimburses $7616
Commission 9%. $15,355
Insurance $3,503
Tax $1,565
Repairs $3,535
Permits $1,369
Garden/Cleaning $4,732
Total expense: $37,675

Coastal California city that is extremely popular vacation destination. 1 acre ocean view. City water and sewer. Paved

Is this a good deal?

1. does the total gross income include the 1k/month rents? 2. $200k each for a manufactured home sounds high

@Michael Perreira , circa 1%/m return for an acre in California that "has oceans and sunset views" sounds like a deal (for the land). I agree with Joel regarding @$200k seeming too high for the three park-owned mobile homes. And yes, I would want to know what portion of that $175k income was due to those. If all of a sudden, removing their income from the equation it comes back to say 0.5%/month for the rest of the lots, then hey, isn't that return available all over the place anyway? Perhaps it mainly depends on your vision/ability to value-add. Good luck...

@Joel Warner and @Brent Coombs. Thank you for your response. The total rents from those 3 units is $30,200 for the yr, I think I can get the same space rent as that and not have to "own" the depreciating asset. But my vision is to use those 3 as vacation rental. The units are a bit expensive due to location and being a bit "fancy" for a mobile home.

Originally posted by @Michael Perreira :

@Joel Warner and @Brent Coombs. Thank you for your response. The total rents from those 3 units is $30,200 for the yr, I think I can get the same space rent as that and not have to "own" the depreciating asset. But my vision is to use those 3 as vacation rental. The units are a bit expensive due to location and being a bit "fancy" for a mobile home.

 Doesn't mean you have to agree to pay that amount. If they say they won't accept less, are they bluffing? Conversely, if you say you won't pay more than a bargain-bid, are you bluffing? Work it out...

@Jeff Goddard I have been completing refi’s on my local properties to generate enough for down payment while waiting park out to see if they’ll drop the price on the 3 park owned homes. How’s bakersfield market for you?

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