Hello BP Community!
We're looking at acquiring a small mobile home community (~70 pads). The roads are currently gravel and I'd like to model in some capex for paving the roads once acquired. Is anyone able to share any rules of thumb for ball parking expected costs and scope of work?
Rule #1 in paving: don't ballpark it.
We have paved millions of dollars of park roads over the last 25 years. What you are going to find is the price throughout the U.S. is enormously variable. So rather than "guess" at the price, get an estimate or two.
When you are paving asphalt over a gravel road, you are talking about a "from scratch" job, as opposed to adding an asphalt overlay on top of an existing asphalt surface. So you need to know it's going to be really expensive.
Before you go forward consider two other options:
1) Use a "road base" surface (also known as "caliche") which is a step up from gravel but relatively inexpensive. This is the same material that you put under asphalt, but works perfectly fine without asphalt on top. Some lenders will allow this -- particularly in states that have a lot of severe weather or mountainous terrain.
2) Put down a "chip and seal" road, in which you put down tar and then aggregate on top. That's a standard approach for many county roads, and is well-known for lower cost and durability.
As long as you are trying to improve the roads, don't forget to install paved "parking pads" -- typically 20' x 20' squares to park two cars on each lot. Lenders are as particular on this as on road surface.
An inexpensive parking pad option (asphalt and concrete are the standard methods) is to form a 20' x 20' square on each lot with landscaping timbers, metal edging or even railroad ties, and then filling that box in with crushed granite or some other type of rock.
Replacing roads is one of the highest capital items in any park project, so make sure that your deal will support this cost. Get three bids during due diligence and make sure you have the room in your budget to get it done. If a park needs $200,000 of road repair and it costs $600,000 for the park, then the total price is actually $800,000, not $600,000. Make sure that all of your macro budgets and goals are based on reasonable expectations.