My first deal - would like your thoughts

8 Replies

Hi everyone!  SO excited to be able to share this you!  I decided last year to start investing for financial freedom.  I like to jump in so after a few months of research, I just went under contract for a 6 unit mobile home Park in Huntsville, TX. It' on lots acreage so there is room to expand.  I used to BP rental calculator and the numbers make sense.  Would you buy this sort of Deal?  And if so, what else should I be thinking about? Thanks in acreagendkwvance for your feedback!

Whats the lot rent?  Do you own all the homes?  what are the utilities set up?  do tenants or the park pay?  Whats your exit strategy?  Are you self managing?

First congrats on tying a park up, but this is a really small parks so the numbers have to make sense for you as an investor more than ever becuase there is less room for error potentially...just keep that in mind.

For me, this would have to be public water/sewer and be billed directly to the tenants...also they units would have to be all tenant owned and would basically have to either get zero down owner financing or really small cash deal.  

I have looked at a deal like this recently that was really close to me that i could self manage, also came w/ 2 single family homes and could have been a good little deal.  But there is a very limited exit strategy if you go to sell...location is basically everything for a park this small or you need to plan to buy other properties as well.

MHP's this small will experience a higher expense ratio that the typical 30%-40% thrown around out there....

Make sure to do your diligence, get a phase 1 done at the very least, and walk thru every home is they are POH's, and also make sure you can afford to replace something if it goes wrong...electical, HVAC in a home,etc.

@Sandy D. I don't know the BP calculator well but its most likely not going to accurately represent what this deal is.  What @Ryan Groene said.   Feel free to reach out.  If it was south of houston I might be interested .  I have a couple deals on the north I'm prospecting but 6 spaces in huntsville is probably too small for me.  If its something that can be made a great deal though, you never now.  Share some specifics. 

Thanks for the replies!  6 units, owner owns mobiles, well water, private sewer, not individually metered. Cash flows really well with long term tenants. Will self manage for now.  Plan to triple number of homes in three years. 

You mention "sewer", but is it sewer or septic? Could drastically change the expenses? Overall it sounds pretty good except I'd probably plan to expand a bit slower. Over expansion can kill your business faster than almost anything. The exception would be finding multiple homes at a great price that you can have moved at an excellent rate.

In my experience setting a firm goal like tripling that quickly might lead you into the "gotta do this deal" trap. As I've done more than once, OUCH!

Hi Sandy,

Congrats on your first deal!  Don't forget about some of the other expenses, trash, landscaping, insurance, testing the well water, road maintenance.  I am personally somewhat weary of managing Park Owned Homes, since you are responsible for fixing things that may go wrong, similar to an apartment building.  That said, best of luck!

Thanks everyone!  I am definitely immersing myself in the RE investment world and being a newbie here, I am  trying to figure out if I made the right decision.  I appreciate you asking for numbers!    I have calculated cash on cash as 29% and cap rate at 4% for the area.  I probably just exposed my lack of experience here...I read these posts and see everyone talking about cap in a way that I didn't realize before - how its a market barometer of sorts.  What do you think about this little mobile  home park deal with the numbers I just provided? 

... so we are in option period for the 6 unit MPH with bank approved loan. The bank approved a loan because I captured all expenses I could think of, plans to expand in the future, and the place still cash flows. My question is do I still use a bank loan or should I have gone HML? Most of the HML's I talked to said the deal was too small. Just wondering how you would respond to a seller who does not have records of receiving rents - he provide rent amounts for each unit but no record that of receiving rents. Is this a red flag? Appreciate your thoughts on this one!