Looking at a mobile home park to get to apartments

4 Replies

Hello everyone, I hope that you are going to have a great and successful day in this thing we call real estate. I'm just wanting to throw out what I'm looking at to get ideas and perspectives from others on what I'm looking at.

I'm currently a landlord of a SFR and am going to be increasing my RE holdings. My end goal is to move in the direction of multi family housing and apartments. So without drawing this into a really long post this is what I'm looking at.

I recently found a property I'm interested in acquiring. It is a mobile home park with 19 pads on it (17 of the MHs are owned by the park, 2 pay lot rent), a duplex, and a 4plex. The duplex and 4plex are both 1/1 units for a total of 25 units on the property.  The asking price is 319k. After pretty thorough analysis by myself and my bank the property will conservatively be netting about 20-30k/yr.

I've been approved through my bank for the full purchase of the property by cross pledging equity from my other RE.

All that said my question is this. Would you buy a property like this with the goal of moving towards apartments and other multifamily or would you pursue other multi family from the start such as duplexes and greater?

Thanks for all your input

Aaron,

We have 5 mobile home parks (bought a portfolio) and one medium (140 units) apartment building.  I don't think you have to start in either one to get to the other.  I did both within 6 months of each other last year (bought the apartment first).  One callout, when you are looking at the MHP; with park owned homes, though your revenue is higher, depending on the mobiles' age, you really need to dial in a much higher expense ratio. Each park is different so I'm hesitant to give you a figure but perhaps someone else with more/longer experience might be more comfortable providing that for you.

Whatever happens, good luck!

James

Thanks. My other thought is that because the homes are older units that I would plan on either cycling through to eliminate the ones in the worst shape first and just doing lot rent, or owner financing each one out individually. If I do that I could be rid of the expense of the maintenance other than infrastructure.

Originally posted by @Aaron Davis :

Thanks. My other thought is that because the homes are older units that I would plan on either cycling through to eliminate the ones in the worst shape first and just doing lot rent, or owner financing each one out individually. If I do that I could be rid of the expense of the maintenance other than infrastructure.

 Rent to own is now illegal under Dodd Frank.  Another option is a Rent Credit Program.  It allows the renter to build up credits towards the purchase of any park owned home on the lot.  After they stay for so long they can use the credits to purchase. the key is not tying the renter to purchase the house that they reside in.  But give them the option on any of the available homes.  Good luck.

Originally posted by @Matt Boettinger :

 Rent to own is now illegal under Dodd Frank.  Another option is a Rent Credit Program.  It allows the renter to build up credits towards the purchase of any park owned home on the lot.  After they stay for so long they can use the credits to purchase. the key is not tying the renter to purchase the house that they reside in.  But give them the option on any of the available homes.  Good luck.

 Maybe I wasn't real clear but I wasn't meaning rent to own, I meant owner carry or just straight cash sale. Thanks for the input.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here