Fight the city??????

Question

Small mobile home park in Kinston NC

Asking: $125,000

Not in city but off of 58 S

15 space park (septic, well, paved rd)

5 lot only

4 POHs

6 empty but ready lots

$2,200 monthly income

Lot rent: $100

Trailer rent: 2-$400  2-$450

City has already overturned 10yr age restriction. Now home can be 1970+ but they added set back rules. Blah blah clearance from road. Specific space between homes. Zoning will get back with me Monday. Depending on zoning they may not required set back rules. Owner thinks they will and I’ll have to fight zoning. Worth the fight? Mind you I want a small park, for some a small park wouldn’t be worth it.

Bill F. · Answer

@Courtney Johnson

A covered land deal is when you think some piece of land will have redevelopment potential in the future ie. it will sell for way more than you'll pay for it now due to appreciation, but in the short to medium term you find some use that pays the bills and generates an acceptable return.

Underwrite how you want, but I can tell you the VAST majority of sophisticated and successful MHP owners do not underwrite rental income to the parks NOI; it usually significantly inflates the value of the asset. They treat the park and MH rentals as two separate business. You value the park of it's income and expenses to arrive at a valuation for the park. The value of the homes comes from the NADA guide or an appraisal. Add the two up and you have you offer price.

You also don't need to wait for anyone to tell you what the parcel is zoned. Look at the county GIS, find the address, and look at the tax card.

Kevin Sobilo · Answer

@Courtney Johnson, this is an existing park. So, are these potential zoning issues only for the empty spaces? I would think that since your "use" was created when the park was initially built that the zoning rules from that time would apply not the current rules because you haven't changed the use.

If someone buys an old house that doesn't conform to current zoning setbacks, they don't make them move the house. Its use is grandfathered in. I would think it would be similar for this park. As long as it remains a mobile home park, I think the zoning rules that apply should be the ones in place when it became a park or whatever the variance at the time allowed for.

Maybe there is someone here with more expertise that will weigh in on that.

Rachel H. · Answer

@Courtney Johnson Sounds like you may be dealing with the city if you decide to buy the park. Either you follow their rules or you can try to fight it but it will cost both time and money. Good luck with your decision!

Chris Ebert · Answer

@Courtney Johnson, if you're interested in Kinston, there's a larger park that I believe is still available (~$400,000) and would be a much better deal than what you've outlined. Biggest issue is that it's in a floodzone. Shot me a note if you're interested in learning more.

Jack Martin · Answer

@Courtney Johnson sometimes the city will take away the grandfathered use as MH if a space has been vacant for period of time, such as 6 months.  I have even seen cases where the city takes away the grandfathered use immediately if you pull a home off of a space.  That does not mean they are right, but you would have to fight them and it might not be worth it on a park that small, even if you think you could win.  As @Bill F. mentioned, the best place to find the expert MH attorney who would be able to guide you on that would be at the Manufactured Housing Association in the subject state.

With that said, anytime you find a park with lot rent that low ($100) there is usually a demand issue.  Even if you go through all the work to fix up the park and bring in homes to fill up vacant spaces, there will not likely be enough demand to sell the homes to qualified tenant buyers. In other words, even if you got the city to agree, you probably wouldn't be able to fill up the park anyway.

All the best,

Jack

Bill F. · Answer

@Courtney Johnson This is far to specific of a question for anyone on BP to answer.

I'd bring it to the NC MHA once you have the the detail of what the city/county says.

As for the park: What is the land worth?

$125k for a 15 space park on well/septic seems high.

Are you capitalizing the lot rent only or lot rent and MH rent?

My rough math puts the park value (income from lot rent only) between $22k-$45k, which then means each of the four POH would have to have a value of $20k-$26k, to justify the asking price.

If the plan is to have a covered land play then the high asking price is nbd, but as a MHP, this seem over valued.

Courtney Johnson · Answer

Well big sigh and on to find another mobile home park. City of Kinston changed zoning. No mobile homes allowed. Seems not worth the fight after speaking to zoning. Thanks for all the input.

Courtney Johnson · Answer

@C.K. Ebert

Thank you but I can’t tackle that big of a deal yet. I wish I could and I plan to move to bigger. But right now I want to buy a park on my own and I don’t have $400,000.

Courtney Johnson · Answer

@Bill F.

What do you mean covered land play?

Yes I capitalized lot and home rent.

Courtney Johnson · Answer

@Kevin Sobilo

It’s existing but he said it was their land. They put a home here then a home there so I’m not sure if it’s compliant. Guess I’ll just have to wait in zoning to make sure it’s zoned for MHP.

Fight the city??????

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