MHP Opinion on deal

[Chris C.]

Have a local opportunity with a mom and pop park.  Would like a little feedback on the deal.

24 Lots

There are 11 lots as lot rent with owner occupied homes paying between $110-175 per lot, depending on how long they've been there one what they can pay. Monthly lot rent is $1800/mth currently. Park has 9 park owned MH; however, only 3 are rented, only bringing in $800/mth TOTAL. Super cheap rents on old small units. So grand total rents currently are $2600/mth. The other 6 park owned MH are vacant, OLD, BAD, and not worth rehabbing. Best to give away or for a few bucks or tear down. Positive thing is seller has wheels and axles and extra land where they could be moved around the corner and torn down on site, while another newer unit could be put on its former lot at same time. No down time. He knows a guy who could tear them down. 

Rural water company. Individual water meters but one water bill. He reads each meter and calculates the water bill each month and adds to rent.  Each have separate power meter and bills. Land taxes are about $1400/yr.  

All lots are 1/4 acre with septic tank.  I need to verify size of tanks and if I can move in 3 or 4 bedroom homes with existing tanks.

Gravel park roads in a country area but easy access to several city centers with industry.  All homes are older but seem to be decent people living there.

All cash $129,900.

Owner financed at $135K with $35 K down, $100 K at 8%. At a 15 year term

As its sits I get an income of about $ 31,290.65 yr

Expenses of about $ 9,855.00 (These expenses do not account much for repairs on 3 rental units as I would like to sell those asap.)

That's about 16% cap if I am correct.

Here is link to my spreadsheet https://docs.google.com/spreadsheets/d/1WMYg4Pykdq...

[Account Closed]

Your expenses are a little light in my opinion.  We typically pay about $50-$55 per lot for insurance on the park and $150-$200 for each home.  We insure homes to replacement value ($10k-$12k on older units)

Your capital reserves should be around $150 per pad with septic and gravel roads.  Probably safer to be north of $3,000 here.  It sounds like you have enough land for septic, but you may want to call up the health dept. at this point to see what you are working with here.  Could be a big time saver if they have anything negative to say prior to you getting it under contract.

Your upside appears to be to get everyone up to that $175 mark.  Easley has pretty low rents but you may want to call around to see if anyone is higher than that.  The only number I have is for Meadow Haven - eight 6 four 85 nine fifteen 87.  Robert Hall of RSH Inc owns quite a few parks in the Greenville market as well so you may want to see if you can talk to him too. I'm not going to give his out, but he's easy enough to track down.