Mobile Home Park comparison - Lot rents and Allowing RVs

[Michael Baradell]

Hey Guys,

I am looking at a park and am in the middle of due diligence. I've called a few nearby parks and the lot rents have brought up a red flag that I would like some input on. 

Park I am targeting 

55 Spaces (MH's only)

Lot rent $190 nothing included

Public roads and city utilities 

Occupancy is 30%

Park Comparison #1

Allows MH's and RV's 

Over 80 spaces

Lot Rent is $145 nothing included (RV rent is $450/month)

Park is at 100% occupancy including RV's 

Park Comparison #2

Allows MH's and RV's

145 spaces (45% MH's)

Lot rent is $190 (Includes H2O, sewer, trash) 

About 80% Vacancy 

The park I am targeting has not been run very well. Very bad reviews on google. The other parks have great reviews. 

My concern is the obvious. Being that the lots rents are higher than other parks and the vacancy is lower, can I overcome this hurdle by improving the park and making it a nicer place to live. 

Or

Is it too risky because of the cheaper, more experienced competition?

[Frank Rolfe]

Before you go any farther, you might want to run a test ad that says NAME OF EXACT PART OF TOWN THE PARK IS IN. 2 & 3 bedroom mobile homes for sale or rent from $595 per month -- includes lot rent. (XXX)XXX-XXXX.

Run that ad in the largest metro paper that serves your market. Put in in the classified section under "mobile homes for rent". Also run the ad on Craigslist. Use a Grasshopper or similar number. Run the ad for ten days. 

If you get 20 to 30 calls over 10 days it might work. If you get 2 to 5 then it will never work.

I am concerned about the amount of vacancy in that market. There would have to be huge demand to want to tackle a project like that.

Another huge roadblock you will have is lending as nobody likes to make loans on parks under 70% occupied.