Looking for advise on the purchase of a mobile home park

[Nathan Spradlin]

Hi everyone,

This is my first post on the bigger pockets site. I have been listening to the podcast for a few months now and have learned so many great things from listening to all the different stories out there. A big shout out to Biggerpockets for being such a great resource!

A little background on where I am at: I partnered up with my brother-in-law last year (I know a lot of you would saw that's a bad idea) but its been a great experience so far. Last year we bought a property with three mobile homes on it and this year we just bought another property with 3 different lots but only one mobile home on it that we plan to fix up and put an additional two MH's on it.

Here is the purpose of my post. We recently came across a mobile home park with 27 units on it for sale. We have gone out to look at the property, reviewed the financials back to 2016 and met with the seller in person a couple different times. All of the homes are park owned. Based off the P&L, the potential income when fully rented out is about $248k/year but the last couple years his income was around $230-235k including charging $75/month to each tenant for water and trash. There is definitely room for improvement there. His expenses seem pretty high to me with about $40k/year in materials and $60k/yr in labor for maintaining the park and maintenance for the homes. Total NOI is about $70k/yr with a 7.5% cap rate and a purchase price of $970k for the park and $280k for the homes with a total purchase price of $1,250,000. To me, the NOI and cap rate seem low especially after you take into account a debt payment for the property. My thinking is that there is room to raise rents, perhaps screen for better tenants that take care of the place and decrease the maintenance cost and get the NOI up above $100k/yr.

I would appreciate any advise that anybody has to offer whether its something I am overlooking, something I should look more into or what your thoughts are regarding moving forward with this deal or not.

Thank you all in advance for your advise.