MY FIRST DEAL- MOBILE HOME PARK ANALYSIS

[Hannah Hammond]

Hey Everyone! I am looking to buy my first mobile home park and have found one for sale that I am interested in.

-No Park Owned Homes

-City water and Sewer

-2 apartments

-13 owner occupied spaces, One vacant space 

-Not currently sub metered 

-2 acres of adjacent raw land sold with park

-Approx $40,000 of notes on seller financed homes sold with park

-Very good condition and good monthly collection

-Along the main route through the city of Willcox, Arizona.

current expenses include manager, water, sewer, trash, taxes, insurance, and security lights = 38.42% of GI

NOI: $29,188

ASKING PRICE: $295,000

Seller financing 30 year amortization with 6 year balloon. $75,000 down.

My concern is that this park is located in an area that is "Middle of nowhere" status. Population and job growth declined 1% over the past year; however, many new developments have just been built including John Deer Sales center, Massive Family Dollar, New police station across from MHP, and more. 

No terms have yet been negotiated. Is this a potentially good deal? If so, what terms should I negotiate? I would really appreciate any advice, thank you so much!

[Jeffrey H.]

I would consider this deal depending on two things: 1) can you parcel off the apartments and sell them separate afterwards; 2) sell the land.

If after that's done using reasonable comps and you put those proceeds towards the debt service you may have much better numbers.

If rent demand is really insane when you do your test ad (3-5 calls per day over 10days) then maybe consider expanding the park on the two acres assuming the permit already allows it or the city will let you.

Either way the numbers need to make sense.  I can't tell how much the apartments bring in versus the mobiles.  I definitely wouldn't keep the apartments.