I'm looking at a 26 lot mobile home park and would love some input on analyzing the deal/specifics. Asking price $279k. Currently has 22 tenant owned units paying $210/month for lot rental and 4 vacant lots. Owner pays water bill up to a certain amount. The P&L I received from the owner could have been written on a napkin and glosses over repairs made to the water/sewage line--the current owner says "costs varied" because he was able to do a lot of the repair work himself.
The park was previously on septic however it appears a previous owner connected to city sewer in 1998. Currently on city water with 3 inch galvanized lines running through the park hooked into 8 in galvanized lines from the city. Current owner has apparently added more clean-outs for the sewer (~3 years ago) and states that when he bought the property in 2014 he put about $5k into water lines to take care of several leaks. Since then, according to the owner, he has only had one minor issue (unspecified) which was last November.
I am a rookie investor with only 1 single family rental in my portfolio however am partnering with a buddy who owns and manages other MHPs. Is the presence of galvanized water lines a ticking time bomb? Any thoughts on the deal?
Thanks and any help would be greatly welcomed!
no not a deal killer at all. You will have to patch and jet lines occasionally. But there are parks out there still surviving and thriving on clay tile. So I think your good with only a 20 year life of those lines so far
If you think it’s a deal killer...please send the deal my way and we can take a look at whether we can take it down.
Thanks for your input! I’m certainly apprehensive with it being my first park purchase, but also excited to jump in. Just don’t want to jump in to a train wreck.
I dont think its a deal breaker but they will need to be replaced eventually. Its metal so they will rust out eventually. Its not like lead pipes so you worry about a serious health risk. Just start taking it into consideration with your CapEx.
And from what I've researched the replacement will be a HEFTY bill, which would seriously cut into the returns. Thanks for your reply!