MHP Deal Analysis Review

4 Replies

Hey All,

Looking to transition out of SFH and recently found an opportunity that I'd like to get the communities opinion on. Below are the details:

MHP-List Price $275K

20 Acres

25 Pads

17 Lots have POH - 8 currently rented - Avg. Rent $425

8 Vacant lots - 7 TOH - Lot rent $135

City Electric

Well water - All testing past for previous 2 years

Septic system - New pumps 1 year ago

Currently has homes on only one side of private road. Told current well/septic could handle 20-25 more pads

Comps POH are renting for $550, lots at $185-200.

As it currently operates with known expenses (taxes, insurance, licensing, testing, etc.) as well as POH Maintenance, PM, and other CAP EX, I'm showing it as a break even investment.

Would very much appreciate any additional insight the BP community is willing to share.


Thanks,


Clint

So we looked at a MHP with 45 acres, and the open acres would've required quite a bit of maintenance.  Are the acres in this one open pasture, wooded?  How's the driveway?  How far away is the water connection if you were to get on city water? What's the seller's motivation? Is there room for negotiation?  Will the town support filling 17 more homes?  What if you add another 20 pads?  How many large employers does the town have?  

We still haven't purchased one, but those are some of the questions I'd have. 

@Anna Catron thanks for the response.

I factored in maintenance for the unused acreage. There are about 3 lightly wooded acres that are kept like a park. The other is mainly pasture.

Driveway/road is gravel. It's in pretty good shape.

City water isn't a realistic option, which is a bit of a concern.

Haven't been able to get a straight answer on the motivation yet which is also throwing up a flag. They've only owned the park for four years. I think they'd be willing to negotiate, but I want to have some offer options for them. Population has been growing very slowly at less than 1% annually. There are solid employment opportunities within 15 minutes.

I appreciate the additional perspective and love to hear from anyone more seasoned in this area.

Filling the existing lots seems realistic, but adding 20 lots might be a little far fetched.

Would anybody else from the BP community mind taking a look at this and providing some feedback? Excited with the opportunity, but want to make sure I'm not missing anything.

Thanks in advance!

Quick analysis 

15 current lot rentals (not including the park owned home rent) at $135


15 x 135 x 12 months. = 24300 x .5 expense ratio = 12150

10 cap rate (standard valuation). 

12150/.1 = 121,500 value. 

You can add shell value to each park owned home. Factor condition and age of homes. They go from worthless to maybe 20k 

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