Getting ready to develop park

[Samuel Coronado]

I am starting a park that will end up with roughly 20-25 lots on plot of land that's roughly 20 acres (including an existing 4/2 house). The house rents for $1200 month currently and will be able to get $1600 if renovated (finish basement bathroom, new flooring and fixtures, mainly cosmetic). I am having land cleared soon for either 4 single wide homes or 2 doublewide homes. The singlewides would be roughly 1000/month gross rent each ($4000 total). The doublewides would be $1500 gross each ($3000 total). I am leaning toward the doublewides for longevity and lower turn over purposes. On the other side, I am planning 15-20 doublewides. These will be done in multiple phases. 

But per lot it will cost roughly the following:

$1,500 Electrical poles, meter installation 

$2,000 water taps and connections

$5,000 grading and land prep

$8,000 septic installation (assuming a 1:1 ratio of homes to 1000 gallon septics)

$5,000 down payment on each home ($700-750 / thereafter per unit)

$21,500 total set up x 17 = $365,000

Ongoing expenses after development would look something this for POH model: 
$12,750 a month in mobile home mortgages (17 x 750 for PITI on each unit)

$1,900 a month in land mortgage PITI (house)

$3,000 a month landscaping

$2,000 a month in reserve emergency fund

$2,200 management

$21,850 a month total expenses 

$262,200‬/year

Ongoing incomes after development would look something this for POH model:

$27,000/month ($1500 x 18 {17 mobile homes plus house})

$324,000/year

324k-262,2k = 61,800 net pre-tax profit or $5,150/month.

Opportunities to reduce start up expenses: 

Bulk deals with the government or contractors for doing all the work at once (electrical, water, land grading, septic) 

Trade free rent for someone to mow and landscape (turning a $3k event into a $650 event every month). Savings of $30,000 a year. 

Management fees- free rent in exchange for licensed agent living in the community and coordinating work orders, etc. 

$288,000 income - $199,600 expenses without management and landscaping = $88,400 / year or $7,366/month. 

Doing the numbers on a commercial property value calculator, without debt service I will be at at a valuation of $3,026,400. 

Property is currently worth $425k before the land improvements and development of $365k being added. $790k turning into a multimillion property seems like it's too good to be true. Can someone tell me what I may be leaving out before pitching this?

This deal works best with an equity partner and I have a short list of those who will be looking at the deal soon. 

[Roger D Jones]

Quote from @Samuel Coronado:

Quote from @Roger D Jones:

Decks, porches and skirting will be significant.  Not sure if you have it included elsewhere.

Have you listened to Frank Rolfe's webinar on new park development?  Pretty insightful.

Decks, porches,  skirting, delivery, leveling, and set up is included in the price of the homes from the dealers and factories I am buying from.

I have not heard that webinar yet. I thought he was more focused on the TOH model, but I will definitely look out for it. Is it on Spotify or YouTube? I was also aiming to take his course. I've owned MHPs before, but I am looking to scale upwards now. 

 Samuel,

Here is the podcast.  I don't always agree with Mr. Rolfe on some of his positions but many people take his word as MHP gospel.  I don't think he represents small MHP investors well with his anti POH rental positions and his often derogatory and demeaning views of MHP residents.  

The New Park Building Boom That Never Was - Mobile Home University