Need Help on a MHP deal

[Philip Dalhausser]

I was hoping to get some of your guys' opinion on a deal I am working on.  I'm currently pursuing a small MHP with 12 spaces, 11 are occupied by tenant owned mobile homes.  The cashflow is great and I would love to add it to my portfolio (this would be my first MHP).  My reservation is that it's out in the sticks, the road that runs through the park isn't paved.  It's about 15 min away from a city with a population of 100k but there isn't much around the park.  Also the current owner swings by a couple times a month to pick up rent, the tenants pay in cash.  So I am having problems finding a property manager that would deal with this.  I read in someone's post where they referred to a rundown MHP as a "toilet," I am worried that's what I'm dealing with.  Thanks in advance!!    

[John Arendsen]

I'll digress back to my favorite and persistent question. Is the MHC in the PATH of PROGRESS? Or is it in a run down and blighted part of town moving away from that PATH? There are MHC's all over the USA that should be closed down and rezoned for higher and better use that I wouldn't own if they were given to me.

Another thing that hit a nerve is the thought of having anyone manage my CASH. I don't care if your born again faithful brother or sister is managing your doe rey me. When it comes to CASH it has a tendency to get legs. If you're not going to be the one personally handling your money expect to be ripped off. 

As far as  TOILETs is concerned that was probably me. I say that because I'm not seeing many other Mobile/Manufactured Home Contractors on this platform except for me and that's how most contractors refer to them when they're really run down.

Another thing that rubs me the wrong way is the dirt road. Where is this MHC located? Does it flood? Is it in a flood plain? What condition is the well in? The septic? IMO you could be buying a lot of headaches even if you were your own PM which it doesn't sound like you will be. 

Lastly unless its easy for you to jump in your car on a moments notice and get to the MHC in less than an hour or so I'd avoid it like the plague. I've seen too many absentee owner scenarios in my 40 years in this biz. Unless your an investor in a large syndication or a REIT that owns several MHC's and can dollar cost average the bad ones from the good ones I'd proceed with caution.

The photos below are a project I'm currently working on in Leucadia, Calif, a funky little North San Diego beach community. But on the upside it's surrounded by multi million dollar mansions and estates and there's really an issue with affordable housing which is a very relative and open ended term in this case.

This home is a 'TOILET" and will have to be rebuilt from the frame up for a cost of about 75k (contractor cost). But I knew that going in. I paid 100k for the privilege of leasing the space for 1k/mth adjusted upward and escalated according to the CPI annually.

It will be stripped to the frame and rebuilt from the bottom to the top inside and out with a new 12/12 pitched metal roof. It will go from looking like an old 'WOBBLY BOX' trailer to a quaint beach cottage and will mix in well with the 92024 zip code which BTW is one of the highest valued per capita zips in San Diego County.

Sure it will cost me 175k plus 1k/mth to purchase, rebuild and sub lease this home but the good news is I can get about 2500/mth on it while it continues to appreciate due to is very desirable location of less than 300 feet from Beacons Beach; one of the best surf breaks on the planet.

Like I said everything is relative. When all is said and done I'll be making about 18-20k/yr and when and if the time comes to sell it I'll be able to get at least 200-250k for it at todays values. If beach property in San Diego continues to go up like it has for the past 100+ years it will be much more than that.

Just saying...................................