Looking for some advice from MHP pros out there
Hello Everyone - I am an experienced multifamily investor and currently have my first MHP under contract. Never thought I would do it but this opportunity looks legit. This park is 90 Mobile Homes and 37 RV spaces with dry storage, all except 3 MHs are tenant owned and those 3 have notes attached that I am inheriting. The park is owned by an out of country owner who has a seemingly competent park manager who has a lot of experience. It is an older pride of ownership park with lush landscaping and very long term residents. The park is in a unique location in town on the busiest street across the street from a main city park, shopping, Walmart, etc while the competition is a drive away. This park caught my eye as it is in the city where I currently already own 250+ apartment units. My apartment PM has MHP experience and has agreed to PM for me. Just starting DD and would love some advice:
Park is running at nearly a 60% expense ratio on $450k gross income. $90k in payroll split between park manager and 2 part time employees.All city services but no metering in place except for electric on the MHs. Water is bill backed via flat RUBs at about 1/3 of the actual cost. Park is getting killed in utilities - $65k water, $30k trash/sewer and $45k electric from primarily from the RV rentals which generate $60-$80k of the gross revenue (seller financials are terrible and misclassified). The park has a defunct well system which went dry and could be dug deeper and easily reconnected to the plumbing to convert back to well water.
I am purchasing at an in place 8-9 cap on actuals plus a 55% expense ratio. My value add will be primarily lowering expenses with site enhancements and bringing lot rent to current market $425 which is already proven and in place on many lots. Payroll is high primarily due to the RV business from what I can gather. My goal is to convert the RV space portion of the park into either minimum 30 day visits with electric bill back or pour pads and convert the 30 amp into 50 amp service and convert to more MH. I figure this will allow me to run the park out of my multifamily office a mile away using staff already on payroll. Maintenance such as in ground plumbing leaks, grounds and pool service can be attended to by my staff of 3-4 already servicing the multifamily. I'm also considering fixing the well and getting off city water, this would be a savings of over $50k after all the well inspections, service and water testing.
Questions - what is the best strategy for the RV side? Continue as is, convert to more MH sites or change policy to monthly minimum? What is generally the cost of upgrading service 30 amp to 50 amp per site assuming this is a must if I convert RV to MH? What is the best way to submeter or billback electric on the RV side assuming it stays? Direct utility co billing is only available currently on the MH side. Should I consider repairing the well and going that route or stick to city water and implement a better submetering program to recapture more than 30% of the cost of water?
Would love to hear from some of the MHP experts out there. @Alina Trigub what do you think and lets catch up:)