mobile home parks

[N/A N/A]

ok, so i have what looks like a great deal on a mobile home park, i'm just trying to figure out which route i should take once i buy it. the current owner has 16 mobile homes which he rents. he has never owner financed or rented spaces. i would have all 16 fairly new mobile homes included in the price, plus 100% occupancy, and the land. the park is set up for 19 mobile homes total, each running on a seperate septic system, but he bought it with 16 homes and has never used those other three lots. i have 2 months until the first three rental contracts are up and i can do what i want with them. i have heard wonderful things about rent to own over four years and then when their mobile home is paid off, they can either move it off your land, or they can continue renting that lot. this way, they pay a rent amount for the land and also seperately they are buying the home over usually 3-5 years. my question is if this deal comes with all the homes, how do i go about switching (after their contracts are up) to a better solution such as rent to own? i can't do a lease with option to purchase with 3-5% of value non-refundable because trailors depreciate unlike houses...or can i? it would be great if i could do this and i am new to all things "mobile home". i just know that this looks like a great deal, even if i kept renting exclusively. although i don't really want to be a landlord and be responsible for all repairs. any help would be great.

[Ryan Beckland]

As a rule you need a minimum of a 12% cap rate for a MH park deal. In order to calculate whether this is a good deal or not, you should use the following formula to arrive at a ball park purchase price:

lot rent x # occupied spaces x 60 PLUs
lot rent x # unoccupied spaces x 30
then you've got to add a resonable price for the park-owned mobile homes.

So if your lot rent is $150 per month, then it should look like:
150 x 16 x 60 = $144,000
150 x 3 x 30 = $13,500.

So the value of your park (land, hook-ups, etc) is around $157,500. The you add the value of your mobile homes.

I sell mobile homes on contract (not rent-to-own). I wouldn't buy a home that I couldn't get triple my wholesale price for. So if my market analysis tells me that a 1993 3/2 single wide will sell for around $10,000, I'd buy it for about $3300 MAX, and then it depends on condition.

So i you've got 16 1993 singlewides that you can sell for $10k each, then you can pay $52,800 for the whole package.

I wouldn't do rent-to-own. What you do is sell them on a promissory note and retain the title as the lienholder until the note is paid off. Remember that MHs are not real estate, so you've got a lot more flexibility in terms of what you can do with them. I usually charge 13-18% interest and my average monthly payment is $250 for a home.

Now, you should also realize that banks will be very hesitant to loan you the portion of the purchase price that you are using to buy the mobile homes. Banks don't usually lend on mobile homes. You might try to get the seller to carry a second for the price that you negotiate on the homes.

Be sure to do A LOT of due diligence. The infastructure of the park needs to be thoroughly checked. Also, city and county governments tend to dislike mobile home parks. make sure that you can retain the zoning that you need to keep the property as a park. Another thing is that you should be sure that the spaces can accomodate 16x80 mobile homes.

Thats all I can think of. Hope it helps.