South Eastern MPH Analysis

[Mark Patino]

Hi all, 

        Just found a 10 unit MHP that came to market in my local area. Looking to see if I'm not thinking of something or if I'm way off in left field for an offer price.

Asking Price: $469,000

Units 1-7: $650

Unit 8: $500

Unit 9: $950

Unit 10: $200 (does maintenance and lawn care for reduced rent)

Total:  $6200 gross monthly rent (trash, water, and lawn care provided in rent) // $74,400/Annually

*All units MTM currently*

Expenses: 50% or $3100/monthly // $37,200/Annually

NOI: $3100/month // $37,200/Annually

At an 8% cap rate = $348,500 Offer Price

At a 9% cap rate = $309,778 Offer Price

*Note: The county environmental office DOES NOT have any septic permits on file - I would need to file for all 10 septic permits for ~$7K-$10K.*

Value Add:

I believe that the value add course of action here would be:

1. Bill back water

2. Bill back trash

3. Raise rents to no less than $800, but currently could support $950

*Note: This would be over the course of a 12 month period, only transitioning 1 unit at a time to higher rents to decrease our risk*

Would like to get an outside perspective on offer price, if the expenses are accurate, and if the value add makes sense. I'm leaning towards moving forward with this deal contingent that the permits go through with the county, but would like some input from others who have already done something similar to this deal.