I'm considering selling 2 single family rental homes that haven't and probably won't increase in value for about 20 years. I have about 30K equity in each after realtor fees. I want to take the profits into a 1031 and combine that with a 35K loan from my 401K for a down payment to purchase a mobile home park. I'm looking for one with city water and sewer and 2-4 park owned homes which would require maintenance (but considerably increase cash flow). What does everyone think? Good idea or bad idea? I feel like there isn't enough affordable housing and I've grown up around "trailer folk." I have experience screening tenants, although it's at a higher price point for nicer properties.
My one rental home has had 1-2 months of vacancies for each of the last 4 years and it's strained my cash flow when this happens. It's being managed by a property management company since it's very far away.
My other property is local, has had the same tenants for 2 years and has positive cashflow of $150/month after expenses.
Not a bad way to go. Just note that if you are going for bank financing, many lenders take income from park owned homes and throw it out the window when calculating cash flow. I don't know why exactly, just the way it is. We bought our first park a year ago and really haven't found it to be too much different than operating our apartment properties. You are still dealing with "tenant" mentality in some cases. In NY, the rules for renting in parks (particularly evictions) are different, so make sure to know the rules to play by. Our park is land lease only, we do not rent the homes themselves, which I am happy about. I have looked at parks with park-owned homes and planned on selling them as soon as possible just because I don't want to deal with that part of it, we have enough of that dealing with our apartments.
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