MHP Deal Analysis

[Zachary Rubin]

Hey all,

I'm new in the MHP space and am currently analyzing my first few deals. Any help from experienced MHP investors on the below deal would be greatly appreciated! Thanks!

• Rural area (11 miles to walmart)
• unpaved parking
• no real landscaping.

9 POH: (1 rented at $600/month, 8 rented at $500 per month) *Homes all homes were built in the 80’s*

Park has space to add for 4 more lots (Pending permit approval)

Total Current Gross is 4,600

Expenses: Current owner is 85 years old and has very minimal records. Park is on city water which is not currently paid by the tenants (potential to bill to tenants). Park is on septic that is serviced yearly. Park is gravel roads with no real landscaping. Owner is asking $280K.

My thoughts:

(Gross revenue x 12) - expense ratio = ($4,600 * 12) * 50% (estimated expense ratio) = $27,600 NOI

At a 10% cap rate this would = $27,600/.10 = $276k

Any thoughts or comments would be greatly appreciated!

[Will Stewart]

I’d consider whether that’s a good market to invest in if POHs are only renting for $600 a month. It’s hard to make money on that long term. If they’re really well maintained and you could sell them for $20 or $30k each and charge $400/mo lot rent with water billed back, could be a nice little starter park.