Buying a Mobile Home Park for the first time

[Shawn C Steider]

I have a chance to buy this trailer park with owner financing for 185k with a 17.3% down payment (32k) at a 6% interest rate amortized over 15 year term with a 5 year balloon payment. Right now it is at 40% occupancy(19 out of 50 filled paying rent, plus free lot to the manager). Including the debt service, management costs, sewer plant/well tests, trash, electric, and taxes, I am about breaking even. I feel like this could be a great deal but the present owner is warning me that I might be running at a loss and he doesn't want the park back because its his fathers' who is 93 years old and just recently put into a Home. Am I forgetting any expenses? Does anyone have any experience with trailer parks That I could talk to? I own 5 rental units right now (a 4 unit apartment building + 1 sfh) and this trailer park is 50 pads with 19 of them filled. Lot rent is $245 per month just raised this year from $225. There is also one trailer that the park owns and rents out at $465 per month. The managers mow all the lawns, maintenance and do the daily water testing. 

[Brenden Mitchum]

Hey @Shawn C Steider

At first glance, it appears you could have a very sweet deal here. My biggest focus would be on 3 things:

1. How's the market? Are you in/near a major metro with strong demand for affordable housing?

2. What's the utility situation? Private or public? Submetered or mastermetered? Sounds like you have a package plan and well, which come with some very specific challenges. Are you familiar with these?

3. Infill is the most challenging aspect of a turnaround project. How do you plan on bringing in homes and have you budgeted capex for this?

If you're totally lost after reading that, shoot me a message and we can discuss further. MHP is a very different animal than any other type of RE asset class so don't fall into the trap of thinking you can handle it since you have other rental properties.