MHP with Old Park Owned Units

[Keith Marble]

After listening to all the podcasts on MHP's I am considering one to purchase. I have found a property where most of the units are park owned. I have some information on the units and ALL of the park owned units are at least 50 years old. After listening to some of the podcasts I realize I have a few options if I decide to invest:

1. Sell the units for whatever they are worth to tenants. This will decrease the monthly income as well as the maintenance costs. I would be able to recoup my down payment at half the cash flow.

2. Replace the units with newer units. I am not sure how much this will cost. I assume $5k-10K per replacement (unit + placement). Also depends on if local laws allow this.

3. Keep the units. Remodel within reason to increase rent.

This will be my first investment property. I have looked are a lot of properties now, even had a few failed offers. I have had this one on my radar for 3 months and keep coming back to it.

Does anyone here have experience with old park owned units?

[Ken Rishel]

Originally posted by @Account Closed:

@Keith Marble  Its 2016 so if you are saying the homes are 50 plus years old they are 60s homes and built pre hud.  There are a lot of potential issues, risks, and gray hairs from this.  The first stop I would make is talking to an insurance company for parks to see if you can insure this risk and what their take is on it while you work  a turn around plan. 

1. Is the market strong? There should really be some very good other stuff in this deal in order to even consider it. This could help you figure out if you think the plan to converting tenants to owners will work. 

2. When the homes are 60s, typically the lot sizes will be smaller.  You will want to check with zoning on what the current setbacks are and ability to replace homes. Also, if you replace the home, will there be a home that you can fit ( i.e. not too big ) in place of the existing home 

3.I would not begin to try and remodel them and hold on to them, this scenario does not end well. 

I don't want to discourage you but its going to be a bit to take on but that does not necessarily mean you should not .  You will have to evaluate the whole picture of upside, price, is it seller financing, lot rents are 500 in the mkt and your home rents are 300. It can be discouraging to find a property and the more failed offers means the closer you are to the accepted one.  

Podcasts are a good resource but if you are serious about parks, you need to get the Frank and Dave due diligence manual so you can walk through step by step to avoid the land mines..... 

 I second what Jack said.

Here is a quick deal story for you.

I bought a park in similar condition to what you are describing. It had 72 spaces with mostly pre HUDs in place. I brought in an experienced team. After redesigning the park and getting clearance from the local village for my plan, we removed every single home sort of piece meal, but still in a matter of months. We redid every pad and upgraded all the electric and ended up with 50 pads that could accommodate 16 wides. I also bought 50 brand new front porch model homes taking delivery as fast as they could deliver them. We then sold and financed those homes. We did all of that in less than a year. I made a lot of money doing it. It was a success story that makes the unwary salivate.  

That is where many gurus stop. They rarely tell you what you need to make these deals succeed. The truth is, it could have just as easily have become a money pit.

What it took was a lot of vision backed by a lot of cash. (Not borrowed, but real cash.) Around $2.5 million not counting the money to buy the park in the first place. Without the money, the experience, and the ability to pull together an experienced team to handle the redo, the sales and marketing talent who could sell 3 homes a week every week, and the fitness to handle outgoing renters and local authorities for zoning and building code issues it could not have happened.

Jack is right. You should learn before investing. Talk to Frank and Dave. Talk to George Allen who wrote the book that brought Sam Zell and many others into the business. Attend the Louisville Show in 4 weeks and listen to the hours of free educational programs and then network like crazy. Then, when you have a better idea of what you need to succeed, and what the pitfalls are, consider investing. 

Good Luck.