Mobile Home investment

6 Replies

Hello! 

I am new investor with the means to go big or go home. I have been a fan of the BiggerPockets for a couple of years now soaking up the information to better prepare myself towards my life as an investor. I recently received a portfolio on my ideal purchase of a MHP. With what tools I have acquired to analyze this deal- the numbers seem to work out. 

Was wondering if this deal made sense in more experienced eyes. Let me know what you think?

 

what’s the purchase price?

@Zach Elcott ....if you purhcase these right and live close by...these could work out to be a good little parks based on lots rents above $400 a month.  Just keep in mind that on smaller parks...your exit strategy is going to be limited to a very few number of buyers, unless you own another larger park near by that you could lump into the sale....

It really depends on how many POH's these 2 parks have and at least private sewer(septic) which depending on which state your in...check EPA laws and see if they have been giving any owners grief on having a septic....make sure you can replace leach fields and do you due diligence on the septic.

Also, if its private water as well, your going to limit your resale as well...but it doesn't mean that this couldn't be a decent park.

I would assume a 40% expense ratio or higher on both parks, because they are smaller parks and on private utilites, at least part of it.

even with a higher lot rental amount, your still going to have a harder time reaching economies of scale at times depending on vacancy,. 

hope this helps

it would depend also on how much I pay for the park, if I have any room to raise rents to market or a little bit above market, if I can fill any vacancies, if I can lower the expenses some how, etc. I would focus a lot on how I can improve the NOI. I would also do test ads to see if you can fill vacancies easily.

@Jon Dorsey The asking price is for the 9 lot is 539,999.00 and the 18 lot is 700,000.

@Ryan Groene I do live nearby which makes things easier. I plan on holding onto it for some time and acquire more MHP's along the way to sell in a portfolio. I appreciate the input- very helpful. I have not checked on the EPA laws but will do now!

@Gulliver R. I don't know how much room there is to raise the rent since it was raised last year from now but as a beginner - what do i know, theres much more I need to learn which is why I'm thankful for your input.

go to google maps and yp.com and look for mobile home parks in a 5-10 mi radius. Then call them asking what their lot rent is (pretending that you and your wife and one kid are looking for a park to live in). You can also see if they have a website and sometimes they have what they charge for lot rent on there. Then you can see if you have room to raise rents or not. If it’s no room or very little then that’s a red flag. 

These are very expense parks you’re looking at. What states are they in?

@Zach Elcott  I’d echo @Gulliver R. that these seem expensive for their size especially if you’re going to add in any financing. 

Good news is that you're close and will be able to do everything yourself. Bad news is that the next buyer may not and will have to factor in additional expenses, reducing NOI.

It comes back to your goals and what your looking to get out of it. 

Best of luck. 

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