Help! Just got my 1st Mobile Home Park Under Contract!

[Karla Yudy]

Any experienced mobile home investors out there? 

I'm looking on some feedback about what steps to take when buying a mobile home park as I have no experience with mobile homes! This is a small park (only 6 homes) so I think it is manageable but I am kind of unsure about what steps to take next. 

I'm in the due diligence process now what things should I be looking to investigate over the next few weeks to make sure this is a solid investment?

A little about the park:

-Small park -only 6 homes on 4 lots of roughly .5 acres each. 

- sits on a residential street, so not a park in the traditional sense; other properties around it are rental/owner occupied mod homes or SFHs (average price of these homes are roughly $100-110K

-total rental roll is $3,500 on a $252,000 purchase price (this is what attracted to me to park in 1st place - extremely hard to buy this type of income stream at this price where I live)

-on well and septic (don't have much experience here, what should I be researching/verifying? 

Overall, I was really attracted to the deal because of the income the property produces but what other things in general should I be looking into/verifying?

[Wilson Lee]

Net operating income / sales price = cap rate

I just took your numbers,  If the 3,500 is not net operating income.  Then take out your operating expenses and do the math again.  The cap rate would be even smaller.

For a mobile home park,  cap rates that I looked at where 8% to 10%. 

As for the part about owning the trailers,  Get the year make and model and pull the value from the NADA listings.  You may be shocked (good or bad) to find the retail value of the mobile homes.

http://www.nadaguides.com/Manufactured-Homes

Renting mobile homes is not the same as renting mobile home lots. When renting the lots, Mobile home owners will stay put for years as they don't have the cash to move their trailer. But people renting mobile homes can move out when ever. So there is much more turn over cost. The cost to do any repairs in a mobile home cost about the same as a SFH. But, rahab in mobile homes do not increase sales price the same as in SFH.

The 6 homes on 4 lots is also something to look into.  Check with the zoning board to see if that is a violation.