Georgia Park with high extremely high vacancy
I'm a beginner to REI and I've been bitten by the mobile home bug. I've evaluated a ton of properties and even started getting an investor involved in one park so see if we can make a deal. I called on a park here in my area (that I don't think is a good enough deal to move forward on) I stumbled on another park right next door from an areal view. The first thing I noticed about the park was the large number of vacant pads and an extreme lack of cars parked next to the existing homes. I rode out and took a look for myself and I was right. This is about a 100 pad park that seams to only have around 10-15 tenants.
My first thought on this realization was, "this is a huge value add" then the numbers stated to add up in my head on costs of tear outs, remodels, marketing, utilities, and all of the other costs of in-fill. I've tracked down the phone number to the owner and I'm calling today to see if they are interested in selling.
My question to everyone is this. Should I be concerned with such a high vacancy rate (we're talking 90%+)? I see a huge opportunity once it's filled (if bought for the right price) but I also see my expenses shooting through the roof. In my quick drive by I counted as many as 20 homes that would most likely be need to be removed and at least 20-30 vacant lots. Does anyone else see the potential I see? What questions should I be asking the owner here? Does this even sound like a park that a new investor should be going after?
@Tyler Hardy
Greetings, the owners failed. Ask someone else. Copy someone else business plan. don't reinvent the wheel. Ask other park owners for their experience. They paid for their mistakes. why pay for the same one when you can ask and get it for free.
@Tyler Hardy This will be a huge lift and require a significant amount of capital and expertise to infill the lots and get the homes sold and/or rented. Not saying it can’t be done if you have deep enough pockets, but in addition to that I would recommend partnering with an experienced operator who specializes in these types of distressed investments. Also make sure you are buying the park for what it is and don’t pay up for the privilege of turning it into what it could be! Best of luck!
@Jim Tassoni great advice. I'm actually on the hunt for a partner with enough experience to take on a project like this. I never plan on paying for what a park, or property, could be worth. I always focus on paying what it is worth in its current condition. Thanks for the insight and encouragement!
#2 Mobile Home Park Investing Contributor
- San Antonio, TX
@Tyler Hardy It's best to evaluate the market to see if there is a demand for affordable housing in the area. Learn the market and study the economics of the area. Are people moving in or out? Why? What are the biggest businesses in the area? How are the schools? Why would people want to live there? If you can look at the market factors, it will give you a better idea of the supply and demand to help you determine whether or not to go forward with the lead. Best of luck!
@Tyler Hardy Nice work on finding a Real Estate niche. We currently own 2 parks. One park is what we call "A Turn Around Park". Although this park will have more equity and cash flow when we are done I prefer the park that has less moving parts. We are currently negotiating a 3rd park and it is a turn key park. Our limited experience showed us we could have purchased 2 parks with less effort than all the effort we put into the "Turn Around Park" we are currently working on. Essentially, our time and money would have been better spent on acquiring other parks. With that said, we did gain a lot of knowledge and experience.
You are on the right track looking for a partner. Find someone that knows a lot more about MHPs than you do and work with them. It will save you time and money. And it will most likely get you a deal sooner. Good luck.
@Rachel H. The area has a demand for housing in this area because of the growth in the industrial market here. I actually work for Fastenal in Macon so I can tell you that there are as many as 5 plants looking to hire between 100 and 500 people each. The school systems are not great in this area but it has still shown a draw to lower/middle income earners over the last few years. This has made the Macon, GA market attractive for investors. I've actually helped out a few out of town BP members that needed on "on the ground" intel on the area.
@Shawn Nachurski Glad to hear you've found the niche as well. I wasn't planning on MHP's but I kind of stumbled into it and it's got me interested. I'd love to pick your brain on a few points about the "turn around" park, and the turn key. I've debated which way I needed to go when starting into this and you may be able to answer a few questions I have. If you don't mind talking on the phone for a little while at some point, send me over a PM and give you my contact info.
Thank you both for your reply!
@Tyler Hardy I'm usually not pessimistic but I'd avoid this one. You mentioned 20 homes that need removed. This will cost $2-4k per home. Filling the lots may take years if you have no experience or capital filling that many lots unless you have a unique way to bring in that many homes and sell them at once.
@Trent Chance that was one of my fears. I know that the cost to infill a few lots can be totally worth it but the amount in this park has me cautious. I'm looking for opinions on both sides of the fence so thanks for being pessimistic in this case. I know that this could be an impressive improvement project but I'm looking to team up with someone that has more experience with something of this scale before I go to much further after this one.
@Tyler Hardy no worries but I'd also say to checkout the 21st century cash program for filling lots and especially (if you haven't) attend @Frank Rolfe 's bootcamp (Mobile Home University Bootcamp). Best money I've ever spent on education. Definitely better than the money I spent on 4 years of business school.
@Trent Chance I've heard of the boot camp and I plan on looking into it. I've not heard of the cash program but that sounds perfect for a park like this. Thanks for the help!
@Tyler Hardy, I've owned a smaller park just south of Macon in Warner Robins for a couple of years. Would you like a chance to share a few of my hard learned lessons?
Alan
@Tyler Hardy Hi Tyler.. I am looking at a small part in Macon, pls PM to connect..
i'd be interested in partnering up. Need to know a bit more on the park and the area. PM if interested.
@Alan Majors I would love that! I'll PM you with my contact info. Thanks for the help
@Paul Sofia PM sent
@Alan Majors
This isn’t my post, but I’d love to hear your hard learned lessons regarding operating smaller parks. Please PM me if you’re willing to share. Thanks!
@Tyler Hardy is it possible to run a ghost ad to estimate potential demand of the park? That way you get a better idea of WHY it the vacancy rate is so high. Did the owners do a horrid job marketing vs. doesn’t no one actually want to live there? Good luck!
@Tyler Hardy if you can get it cheap enough it maybe worth it. And maybe Paul Sofia is your answer to the experience !
Find out what the owner will sell for.
@Tyler Hardy High vacancy could present huge potentials. However, make sure 1) buy extremely cheaply 2) Make sure the demand is high. Without demand, you cannot fill the park 3) The permits are in place