Help Looking Over Mobile Home Park Deal

[Micah Cobb]

Hey everyone,

My friend and I are looking at a small mobile home park in our county. Neither of us has ever bought or operated a MHP. My friend owns a business and several rental homes. The MHP we are looking at is owned by one of the largest real estate investors in our town, who happens to be an acquaintance of my friend.

Here are the details:

• -14 Lots
• - MHP includes the 14 mobile homes
  
• - mobile homes are about 20-30 years old
• - getting an an average of $545/month/home, though he is in the process of raising rents to about $650. (some are there, some are on an older lease that has the rates in the $400s).
• - park has a septic system that was installed 5 years ago by the previous owner; one large system for all the homes, not individual septic tanks for each
• - at 100% occupancy
• - lower income tenants so has to deal with people being late or not paying;
• - park expenses are insurance, home upkeep/repairs, garbage, and lawncare (tenants don't take care of their own yards)
• - Took in about $75k last year, spend $15.6k on repairs, and $1.6k for dumpster.
  
• - Net income was around $40k.
• - Asking price is $300,000.

Here's my two questions: (i) does this seem like a good investment? (ii) is this price reasonable?

[Thomas Eddie]

Hi Micah, since you are actually buying the homes and renting those out you are actually buying an apartment complex that has 30 year old mobile homes as the apartments. The big question is have these homes been maintained or are they all ready to fall down? Also, what size are the homes and what are the rent comps? Is the park on city water or is their a well?