Real Estate Agent · Seattle, WA · Member since 2017 · 3 posts · 1 vote
I am heavily considering building a mobile home park from the ground up and installing new single wide units that will be park owned. Has anyone here developed a park from raw land? What pitfalls should I look for? I know that park owned homes are not the preference, but my roi would be much bigger and the homes (even brand new ones) will pay off fairly quickly. My numbers are looking like about 750k to purchase and develop a 35 unit park that will be rented for $450/mo space rent, or $850-900/mo single wide. Acquisition of brand new single wides would pay themselves off in 3 years and development would be paid for in cash......So while I would be floating a ridiculous amount of money for three years, the annual return of 350k after that is amazing.
Just surprised you can actually do a mhp in washington. Have you looked at regs concerning septic systems? Over a certain density you may have to do a treatment plant which i understand to be super expensive. Also is the transport and setup of the homes baked in? What about interior roads, main road aprons, home foundations, site plans, permits, engineering, electrical tap fees, signage, advertising, realtor fees to place tenants.....thats all i can think of.
I looked at doing modulars and found they were NO discount to site built homes when all said and done, just faster
your estimates are fairly accurate, but if your willing to buy a park with 750k cash, you could buy a couple hundred pads that produce a lot more over the next 3 years and your capital will be better put to use than developing a park. it could take upwards of 5-7 years to fully fill the park.
at full occupancy and all Tenant owned homes, your looking at generating about 189k a year of gross revenue(450*35*12)...this is assuming a perfect payment schedule from tenants and all tenant owned homes and this is a hypothetical perfect scenario...which rarely works this way. then you probably have about a 40% operating expense, bringing your NOI to 113k, making the park worth about 1.1 million on a 10 cap. you may be able to get a higher price, but that is only a 500k increase in value before you even bring in homes.
you could buy a couple hundred pads and push rent, increase collections, bill back water/sewer, and fill vacant lots on a prexisting park and increase the value a lot easier and get close to 500k or more in value add appreciation by doing simpler things than developing.
i wish that development of MHP's were easier and more cost effective...we all know that the United states needs more affordable housing. but for the time being, i would stay away from doing so just based on a better use of capital at this point in the MHP world.