All Forum Posts by: Will Graham

I'm looking at some small multi-family properties in Kingsport, and I'm trying to get a read on the city. I'm not super familiar with the area. There seems to be some strong retail development, at least in the areas that I have been looking. But city-data had the crime rate being pretty high for Kingsport. Are there particular areas to stay away from?

Does anyone have any general insight on Kingsport? I'd appreciate it.

Quick question for the Arkansas folks. I've stumbled upon a fantastic deal in Pine Bluff, AR. At least it would be a fantastic deal if it was in any other city. My biggest hangup is the city itself. Really high crime, significant population decrease over the last 20 years, and high poverty. I read that they have some improvements going around the downtown area, but still pretty nervous about this location. Any insider info that I should know?

@Janene Tompkins The MSA was right at 100,000...So decent. Employment seemed somewhat diverse with roughly 25% in manufacturing, 25% in ag, and the rest kind of spread out. 

I am interested in what folks think about this deal. I'll try to not get too nitty gritty but also give enough info.

Park Info:

-Asking Price: 200k

-95 Space Park: 30 Occupied Tenant Owned Homes | 15 Vacant Park Owned Homes

-City Water / City Sewer that is direct billed to tenants. 

-Lot Rent is $125 | Gross Monthly Income is $3,750

-Roads have some potholes and will need some work.

Location Info:

-The population of the town has decreased by over 20% since 2000

-Median Household Income: 30,000

-32% of the population is below the federal poverty line

-Median Rent: $670 | Median House Value: $75,000

-Crime Rate is 4x U.S. average

Summary: 

I feel like the numbers of the deal are solid. I believe rents are below market by $50 or so. Which would make it slam dunk. Even if you didn't fill any more lots. My concern is the city. The high crime, high poverty, and steady population decline. Thoughts?

@DJ Tosh Some people do run MHP’s as rentals. Not many but a few. Here’s the thing though. You want to evaluate the properties the same way that other investors will. Otherwise you won’t have an exit strategy. You’ll have to sell for pennies on the dollar. You can run it however you want once you purchase it.

@DJ Tosh We don’t have all the details but it definitely sounds like a bad deal. Most other MHP investors are going to evaluate the land/business separately from the homes. Find out what the average lot rent is in your area and then use that to calculate your NOI. Then add the value of the park owned homes/stick-built house separately to your final purchase price. Unless the local lot rent is ridiculously high this deal doesn’t look good. I also wouldn’t pay anything for the unoccupied pads.

The best website is right here!! Start listening to the podcast, and browsing the forums. And pick up some books. That will set you off on the right track.

For MHP specifically, also check out The Mobile Home Park Investing Podcast and The Mobile Home Park Mastery Podcast. 

@McKenzie Peterson A lot of cities just don't like the way that mobile home parks look and the way that they are kept up a lot of the time. Some of it depends on how far out your property is from city limits. I'm not sure how many homes it takes to qualify as a "park". You might be able to get away with it if it's only a couple.

Also, you have to consider the costs of development. Roughly 20k per pad to get the infrastructure in place. Maybe more if you have to install septic. Then you have to buy homes and move them to your property. Just make sure you consider all the costs.

@McKenzie Peterson Most cities won’t let you develop a new park. Depends on the area for sure, but in general it’s tough to get approval.

I'm curious if anyone has good suggestions for evaluating the current value of a park that contains all park owned homes. How do you evaluate what the lot rent would be so that you can arrive at an estimated NOI? Do you just look up surrounding lot rents at other parks?