Shopping for a MHP. Ya, I want that...

[Joe Hartman]

I've read some of the other post, like http://www.biggerpockets.com/forums/30/topics/72432-is-there-a-sweet-spot-for-mh-park-size-and-type to poll people for what they look for in a park. Things came up like 30-100 pads, no wells or septics, owner willing to finance, none of the units are rentals, park is just outside big market, stable or growing market with job market to support it, etc.

Is there anything else? Here are some topics just for example...

1) Invest in areas like CA or FL with high property values. Upside is a developer may want to buy you out, low cap rate when selling, or value still high if things go wrong. Downside is lower cap rate while owning.
2) Do you like having nearby parks? Upside easier to get market values, easier to see if there is a viable market before going, a little competition is always a good thing? Or downside might be easy for a tenant to just move their MH to that other park. If you do like it, how about at the amounts seen in places like Tampa and Lakeland, FL?
3) Do you prefer asphalt, gravel or other for roads? Upside curb appeal, downside upkeep?
4) If you don't care about investing close to home, are there areas of the country you prefer to look? Why?
5) Do you look much at aesthetics thinking that if you improve it, you can increase the value? Cut the grass, trim trees, keep the roads usable, a nice sign out front... are there any other aesthetics that you feel has a + ROI, either by keeping/obtaining tenants or raising rents?
6) Buildings on site? Are they a headache you don't want to deal with, or are they an added bonus to make $ off of?
7) RV sites? Besides making it harder to get funding, does this make you pass before you even look into a property b/c of the more time needed to run it.

I'm not a MHP owner, but am looking into it. So what's your opinion? Got anything else to say about something I missed?

Thanks,
Joe

[Jim Johnson]

1) I tend to stay far away from markets with 'high' values. Because- if I can increase the bottom line of a park by say, $75 per pad buy doing something- and that is based on a $150 per month lot rent- I have increased the NOI by 50%. In a park with higher values- say Denver where pad rents are $600 per month- I have added just over 10%. I will take the larger % gain, in a stable market, over the smaller gain in the 'high dollar' market. Also- in areas with lower pad rents homes are more stable in your park. The value of the homes is higher- so they tend to not move as easily to other parks.

2) So this is a balance- too many parks and you could have too many pads. Back to Denver- lots of vacant spaces in the Denver parks due to very high pad rents, and too many spaces. Homes move around like chess pieces. I would prefer to be on the lower end of this. I can price knowing the 2 bed / 2 bath apartment rents in the area.

3) Roads- the killer here is trash removal. If you have paved roads, use dumpsters at the front of the park. I have both and the asphalt requires you to put away capital improvement funds, the gravel is yearly maintenance. The banks and insurance companies like the asphalt. For me it is all the same really- though I would lean to asphalt.

4) Where to invest- I will say- stay away from trendy or 'boom' areas. I look for stable stuff. So I like, university's, county seats, level 1 trauma hospitals, prisons, stable employment bases that are diverse... I look for the school district NOT to be the largest employer. Then branch out- look at the county and the state. Also- closest airport to you will fly into, how many carriers fly into the airport... etc.

5) aesthetics- well- I think a park should be tidy, with strong rules around keeping yards nice and junk out of sight. So a clean curb appeal is important. But the real driver is adding to the income and trimming expenses. Also- the location- see #4

6) buildings- building suck. Clubhouses in my markets suck money and are a waste. Some areas REQUIRE them... I like one shipping container to house all of our equipment we need to operate the park. We add lights down the center, and outlets on the walls. The cost like $1000 if you shop around and they are tough to break into if you secure them with good locks. Weatherproof and solid... there is my pitch for that...

7) RV spaces are a total different business. Total different manager. Total different expenses... I do not mix rv into mhp... So I vote RV off the island...

opinions very...