Maryland Mobile Home Park Acquisition

[Wesley Thompson]

I'm looking at a small MHP, 6-Units, in Maryland. It will be my fist MHP and commercial property. It's a small market about 30 minutes away from a small city in MD. pp=$305,000

4 of the 6 units are occupied at $850/mo average between lot and unit rent. One unit is tenant ready, and the other needs replacing (expected with sale). Expenses are just under 50% annually with the two units empty.

The seller is at about an 8% CAP on the current numbers. Using their proforma for the occupied and vacant units, it would be about 17% cap when filled. I think some of their expense numbers aren't accurate.

My plan would be to 

1) Convert the POH into TOH through sale of the units to tenants and just charge lot rent

2) Gift the units to tenants and charge a higher lot rent

Both would reduce the expenses for property management, insurance, repairs and maintenance. My PM says they're slightly below market rent at the moment $50-100 per units depending on condition and size. 

Here's where I'm stuck...

1) Insurance - i've found it very difficult to find potential insurers and they want very specific information on the units I don't currently have. Is there some sort of rule I could at least use for underwriting?

2) Numbers - Once I factor in the debt servicing and PM expenses the numbers do not become very attractive. How should I approach balancing this when submitting options on an LOI?

Looking forward to responses and thank you in advance!

[Chris Seveney]

@Wesley Thompson

Guess I am confused you mentioned numbers were currently an 8 cap and if fully occupied a 17 cap- how do those not work?