I need advice on MH deal with extra lots in Wichita Falls TX

[Mary lou L.]

I am in talks with an owner who has 8 lots in Wichita Falls. They are in the country but in city limits they have separate water, electric meters and city sewer. These lots are individually platted and have their own taxes, ect.

There are two with manufactued homes ( I am in the process of accessing them) and the other lots are empty. There were MF homes on them at one time. 

My plan was to get the existing homes up and running and then fill the other lots with homes that I can find. I plan to rent them.

Upon doing my due dilligence with the city, i found out they require homes "not ever lived in". So they in other words they have to be brand new. $$$$ 

The existing ones are grandfathered in. 

This of course increases my budget for these homes. 

If the lots were combined, and designated a MHP. then I would be able to buy used ones, and rent them out.  

Im looking for advice. Has any one done this? Also looking for information on demand for MFH in Wichita Falls and just someone to bounce more ideas off of!

Thank you for your advice! My mailbox is open! Hope to hear from you soon!

[Jeffrey H.]

I don't like to be the bearer of bad news, but both of these scenarios are not good.

Zoning changes are painful, and there are typically minimum area size restrictions - such as 5 acres - in order to achieve this.  Some cities also have very restrictive density requirements.  I found one that will not allow but 2 mobile homes per acre.  They clearly are discouraging anyone thinking about developing a MHP.  Even after the zoning changes the economics of bringing in used homes is expensive compared to home already in place.  More on this below.

With your original scenario there is not much money to be made buying new homes and selling them.  After the land, site prep, set up, and delivery you still have to build porches, driveways, landscaping maybe, etc.  Expect to pay 40-50K for a single new home ready to go and that doesn't include land costs...

If you're doing this from California the economics simply are not there.  Out of state ownership and management of something like this is a recipe for disaster.  You will need something local and that eats into your profits, or if you travel to TX a lot you get the same result.  One of the main benefits of mobile home parks is scale - with a 40 pad park you have fewer swings in vacancy and can absorb capital improvements better.  Under 20 pads and you start to see 40 to 50% expense ratios which takes away their appeal compared to other multifamily segments.

You'd be better off finding a Park that already exists or individual mobile home already in place.  To get a handle on demand I would place a test ad on craigslist, postlets, and the local paper at your target price to see how many responses you get.  If you get 3 or more calls per day you can safely assume you will fill a home quickly.

Best of luck.