Simpsonville, SC · Member since 2015 · 25 posts · 4 votes
Came across a dumpy little mobile home park today for sale for $47k.
6 lots 5 with homes and one empty. All park owned homes. All on city water and sewer.
#1 Rented for 400. #2 rented for 350 #3 Undergoing renovation and not rented. #4 empty, no home #5 rented 350 and #6 rented 400.
What do you all think the likely hood is of getting the tenants to convert to a rent to own situation? I was thinking of a lot rent around $150 should be doable.
So 150*4(rented lots*)*12*.7(30% expense reserve)*10=50,400. Seems like a good price on the park. At a 10 cap I would be getting free homes. Now understand that these are not nice 2015 model homes but fairly old single-wides but free is free right.
Stop! Get yourself educated. Get to Frank & Dave's Bootcamp. Don't do any deal until you get smart about this complicated space. The diligence process must be done correctly - water pipes, sewer pipes, home inspections, competitive research, research on any violations, running test ads, researching the economy, etc., etc. Small deals like this DO NOT trade at a 10% cap rate. More like 15%. And I'm not even sure it's worth that depending on the condition of the homes and what market it is in.
Is the water/sewer billed back to tenants? If not, expenses could be much higher. 40% expenses would be a good guess, but make sure you verify. That assumes a 10% water/sewer usage. I'm looking at a park that water/sewer cost is 25% of income!
And be aware of the competition -- you may or may not be able to pass on costs, depending on your lot rent and that of the other parks nearby.
Stop! Get yourself educated. Get to Frank & Dave's Bootcamp. Don't do any deal until you get smart about this complicated space. The diligence process must be done correctly - water pipes, sewer pipes, home inspections, competitive research, research on any violations, running test ads, researching the economy, etc., etc. Small deals like this DO NOT trade at a 10% cap rate. More like 15%. And I'm not even sure it's worth that depending on the condition of the homes and what market it is in.
Thank you for the information. Charleston sounds like a winner! Ill see if I can find the dates so I can put in for some time off. Thanks again and see you there!
Frank & Dave do their Bootcamps about six times a year in various cities nationwide. They are curiously secretive about the future dates/locations, but you can contact Brandon Reynolds and ask him to tell you exactly when/where the upcoming Bootcamps are. Tell him I sent you.