Going to look at a 15 unit mobile home park tomorrow. 4/15 pads occupied (@ $235/mo), plus one storage unit rented @ $290/mo plus one farm house rented @425/mo. So $1500ish/mo. City water and sewer, but not metered. What should I look for? Tearing through Frank and Dave's book tonight, because I only listened to a couple of podcasts on this subject before I happened upon this deal. Also, it's in a tiny town of 500, 15 or 20 minutes away from a lot of things-- is that a dealbreaker??
@Meredith Mihm It's best to evaluate the owner first versus the mobile home park itself. Make sure the owner is being truthful with you and can provide you with the information you need to do your due diligence. If the owner seems like they are not telling you the complete story and/or cannot provide you with the information you need, I'd move on. In this business, it's best to work with people who are honest and can work with you for a win/win situation. Good luck!
Have the empty pads been occupied in the past or is there just little demand for a mobile home park in that area? With only four pads occupied, I can see why they're selling it...
So here's the scoop. The MLS listing was written really carelessly (all caps, no punctuation, etc.), which made is wonder about the owner. But when we got there, there were lot rent signs up with the name of an investment company who owns 6 or 8 other mobile home parks! So, being newbies, we figure they know more than we do; there must he a good reason they are letting it go. It is in a beautiful area though.
In a town with 500 people it will be very difficult to find a path to progress. If on the other hand the town is close to a major MSA (within an hour drive), then you may still be ok. Otherwise, I'd stay away from parks that are in the middle of nowhere.
So for the $120K you get the farmhouse property too? ie, lot #2 and lot #3? If so, it seems like a fairly reasonable price for that much infrastructure. Not sure what opportunities there would be but it may be worth to consider "highest/best" use for the property.
On a mobile park, typically the park provides water/sewer/garbage and some common lighting so the monthly expenses would need to be accurately determined. I assume the existing trailers (all the pads) are individually metered for electric?
If that was in my area, I'd be researching it to see if it's a way to make a buck... I wouldn't rule it out too quickly.
We talked about selling the house, and then trying to get the park filled up...
Was the park "ever" filled? Or was this someone's project that never panned out?
Would there be a market for recreational uses? ie, people semi-permanently park their RV their to spend weekends in the local wilds hunting and fishing?
Aside from the pads etc, are there other ways to make income streams? Like john said, short term RV storages? Boat and vehicle storages, etc? A town of 500 would have me worried.
I'm worried too, my gut just says no on this one.Whatever its past was, they've for sure given up on it now! I have no idea if it was filled in the past.
One pad has a mini (very mini) storage that cash flows $290/mo, and there is enough unused land to store some boats, RVs etc...
While I am new-ish to REI, I have been a stockbroker, and a car flipper. One thing I learned in both was always trust your gut!
@Meredith Mihm Definitely trust your gut, especially if you're new to the game I'd be hesitant to go for something that has so many unanswered questions. If you can get honest answers from the current owner though, that's a different story. And just because the investment firm owns it and others, I wouldn't write it off. They either don't know what they're doing or maybe the margins aren't good enough for their investors so they're moving on.
Maybe you don't buy it but maybe since you've got what sounds like a potentially good deal, not sure about the low population, but everyone needs affordable housing regardless so maybe look for a partner who is experienced with parks. See what they think and if they're willing to partner with you on it. @John Fedro is a great mobile home source as he sells homes and has a few parks.
Not uncommon for 3 people to split a deal 3 ways if one does the managing, one brings the deal and one provides the cash.
@Shaun J. car flipping? My husband used to flip Subarus when we lived in Colorado. @Braden Coleman , that's a good point. It looks to be cash flowing, but I don't know how the utilities are done-- apparently the residents of the mobile homes pay a $25 utility fee (the house pays their own) for utilities. They are separately metered for electric only...
Maybe I'm just lazy-- it looks like a long, slow process, and I'm in this mindset of BRRR, which is more fix it and forget about it =)
@Meredith Mihm vacancy is the biggest issue with this one, the reason why you and many others have passed.
@Meredith Mihm Jefferson Lilly says to get Google Earth and zoom in on the park you want then scroll back years and it will show you the past homes,. I hope this helps!