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Updated over 5 years ago on . Most recent reply

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Mauricio Quintana
  • Houston, TX
6
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51
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Mobile home parks, what key metrics are used to analyze the deal?

Mauricio Quintana
  • Houston, TX
Posted

Newbie to REI here and in search of knowledge from this awesome community. I've heard many great things about mobile home/RV parks. I'm curious to hear from others what key performance indicators are used to analyze a deal in this specific arena (mobile home parks).

Thanks in advance

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@Mauricio Quintana Have you checked out Kevin Bupp or Frank Rolfes pod casts? They are VERY helpful and were basically my 101 to MHC's. They also have "university" sites with lots of information to peruse. As far as the key analytics here are mine:

1. Location- Make sure that they are in an area that has an economy of some sort to support the need for affordable housing. As well as the median home and rent costs being > than the average rent of a MH or lot rent by enough to warrant living in a park versus just buying or renting a standard home or apt.

2. Utilities: City water and sewer require the lease amount of maintenance vs. septic/well/lagoons.

3. Park owned vs Tenant owned: Park owned is more like when you have a apartment building- you are responsible for the maintenance of everything. The rent is higher, but the banks or financers wont really count that as income like they would in an apartment building when computing the value of the park. Tenant owned means you are renting them the parking spot and only are not responsible for the home itself. Lower rent because it is just lot rent, but less involvement.

4. The expenses usually are taxes, utilities ( sometimes they are paid for by the tenants, others they are by the owner), insurance, legal fees for the LLC/inc/permits and such, landscaping, any well/septic treatments, and then capital expenses/maintenance on homes.

5. The cap rate is more frequently used in this asset class than COCR to assess how good the deal is. And the rents are more an indication of the location, comps, and what is included vs. the 1% rule like in apartment buildings.

6. You are not responsible for paying for the moving of the home when you evict them. They are. And if they cant, they abandon it and in that scenario, you could file to take it over given that it is on your property. If not, then yes, you would have to pay to have it removed.

Best!

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