Is this a good deal? 4 MH's on 2 acres--$60k

Mobile Home Park Investing
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Is this a good deal? 4 MH's on 2 acres--$60k

Tommy Vise
Florence, AL · Member since 2013 · 21 posts · 6 votes

I have a deal that I wanted to pass by everyone:

--4 Mobile Homes--Each is OK condition.  Need paint and some up keep but nothing out of the ordinary.

--In the County.

--2 acres of land that this small park is sitting on.  (Each unit has 1/2 acre.)

Each MH lot has city water, city electricity individually metered.

Each resident is responsible for their own grass upkeep.  

The only expenses that the owner said he had was insurance $800/yr, taxes $550/year, registration stickers $300/year.  

Total income is $1,250/month x 12 =$15,000

Minus 800+550+300= $1650

Income = $13,350  x .70 = $9,345 / 60,000= 15.6%

Is this a good deal?  

Am I missing something?

Thanks,

Tommy V

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  • Alice K.
    Investor · San Francisco, CA · Member since 2015 · 306 posts · 211 votes
    11y

    I live in the west coast, so this sounds so cheap, but no point in comparing as the market is so so different.

    Did you take a good look at the tenants and whether they pay on time or not?

    And, if you can ask why they're selling-- unless they're just old. If they're tired perhaps you can ask why.

    I've worked in an RV resort and you can get stuck with real duds that might not pay rent, or you have to string it out of them.

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  • Jassem A.
    Investor · PA · Member since 2013 · 1k+ posts · 602 votes
    11y

    is 30% for a PM? In terms of 2% rule, it would be 1,250/60,000 = 2.08%.  With expenses it looks more like 1% which is good enough for many investors.

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  • Bill Bodziak
    Real Estate Agent · Bloomfield Hills, MI · Member since 2014 · 117 posts · 30 votes
    11y

    Do the occupants or property owner own the homes?

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  • Paul Ewing
    Investor · Boyd, TX · Member since 2014 · 688 posts · 467 votes
    11y

    Are these owned by the park and rented out?  If so you have all the standard reserves for maintenance, capital expenses, vacancy, etc.  I am assuming that is your 0.70 factor in the income equation.  in my market I would jump on something like that because I could rent them for $550 to $700 each depending on condition.  It looks like your market isn't near as good on the rents as mine.

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  • Jane A.
    Investor · Shawnee Mission, KS · Member since 2015 · 423 posts · 114 votes
    11y
    Is the land on the way of development ? To get this cashflow you could find one SFH in Midwest with better exit strategy :))) but if you like this land or it is close to ocean or you have some plans regarding this land :))) we could not read your mind. For MH in nowhere you could negotiate a better deal :)))
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  • Tommy Vise
    OP
    Florence, AL · Member since 2013 · 21 posts · 6 votes
    11y

    Thanks. Alice K.  The owner is an elderly man that has had a stroke and is a little slow.  He had it priced at $75k but he came down to $60k in the past 2 weeks.  It really looks like it could be a money maker.  One of the smaller homes is just a 12 x 60? and it only rents for $250.  I was figuring that I could pick a 16 x 80 up for less than 10k and charge $550.  I think that the only way to go is up on this property.  It is small but it may be a good deal. 

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  • Tommy Vise
    OP
    Florence, AL · Member since 2013 · 21 posts · 6 votes
    11y

    Yes Bill, the MH's are park owned.

    Yes, Paul, the 70% was for the main., cap ex., and vacancies.  I do beleive that I can definitley increase the rent on these MH.  

    Thanks for the replies.

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  • Bobby Mitchell
    Investor · Poplarville, MS · Member since 2014 · 8 posts · 6 votes
    11y

    @Tommy Vise

    Personally, I'd jump all over that! Don't let small and old fool you, diamonds don't come out of the ground shiny! 

    I am looking to build what you have the opportunity to buy, look at my post > Cash only investing in Mobile Homes - My Plan, I posted yesterday to get an idea of what you can do. 

    Sounds like the seller is motivated by age and health and I'm sure he has trouble with up keep. You are right you can raise rent or later sell the older trailer and upgrade. 

    I say do it!

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  • Justin Tahilramani
    Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
    11y

    @Tommy Vise - It sounds like a good investment from a cash flow perspective. That being said, keep in mind that most would consider mobile homes a depreciating assets. I have often considered getting into renting MH's.

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