Anyone in the central Arkansas area have any experience or knowledge of running mobile home parks? I am looking to purchase one that has an enormous amount of value add potential and wanted to bounce some ideas off of an experienced investor.
A few details:
Asking price is 40% of the county assessed value for the land. 5 acres
Currently at 17% vacancy by 9 park owned homes. 52 lot capacity. 5 other park owned homes that need to be removed IMO (un-rehabable/safety of the park).
Currently brings in $3500 of rent a month.
Water is not sub-metered and costs $450/month by owner. MAJOR VALUE ADD
Taxes are 4400/yr. ~$370/month
Already has management - assuming 10% @ 350/month.
Without due diligence and sellers numbers ~ $2330 net income/month.
Obviously PITI, electric, gas, insurance, sewage/water inspections, land maintenance, permits, taxes etc... are not calculated. Will have these numbers after my inquiry is made at the property today.
City-data shows low crime and 13% of the population are mobile home occupants within the city.
More info to come after visit and meeting with property owner today.
NOTE: Deal breaker for me will be if the property has septic/well water AND no nearby access to city water.
All comments, questions, and suggestions are welcome!
Provide some feedback!
Mobile home parks as an asset class is very different from other commercial types. There is a BP forum on mobile homes where folks post there park questions. I and others have posted in many threads there on how to evaluate a park's offer price etc.
Don't be scared off by private Well and Septic either. As long as they are maintained and you do a proper due diligence you will be fine. More 30% of the US is not on municipal water or septic.
Check for local city ordnances. They might be the reason why there has been no newer homes have been replaced. We have a small park that has room for 8 more units, but city ordnance requires us to put in a mobile so expensive that it will not cash flow. We would love to replace all of them but there is no way to make it work. The area wont support higher rents. entire town is about a 450 range. Anything over 10 years old has to be brought before city council. approved at the next board meeting when ever they meet in the next couple of months. In the mean time the deals are sold. I just love small town politics.
First: Original post mentioned a low vacancy rate that was in fact the low occupancy rate. Current HIGH vacancy rate is 83%.
I have been working with Mobile Insurance Company to get a quote for the MHP. It turns out that the high vacancy rate (83%) and the high number of park owned homes (100%) is enough concern to deter 7 underwriters.
Since the park can't be insured in it's current condition, I will be moving on to other deals that I have found. If anyone is interested or would like to tackle this MHP, I am more than willing to turn over all information I have to an interested party. I only require the interested party let me observe the process through its entirety for educational purposes.
I hope everyone has an amazing 2016 full of great deals and new beginnings.