Trailer park? Never would have thought about it before...

[Jason Burton]

BP,

I am still on the hunt for my first great buy and a realtor I've been working with mentioned to me that he knows an old guy that owns a trailer park. To make a long story short he basically told me that the owner developed Parkinson's Disease a few years back and it's getting so bad that he can't do much any more so he is kind of desperate to sell it. He originally listed it for $275K but the realtor said he will take $200K (it's currently listed at $250K). This thing brings in gross rents of $5900/month and the realtor said his expenses are around $1000/month. Using the 50% rule this thing seems like a great deal at the $200K price. Does this seem like a great deal or are there more underlying costs associated with trailer parks that I'm missing? Besides accounting for vacancy, maintenance, management, and PITI is there anything else I need to account for? If I decide to move forward on this I would do more due diligence on all the expenses and what not. I just want to know if there are things I'm overlooking. I've never even thought about buying a trailer park before.

[Dan R.]

I'm a bit of a contrarian on park-owned homes. In my case, they are very accretive to my goals. Cashflow, not appreciation is my primary goal. I would suggest the maintenance is no more or less than other low-income housing product. The repairs are usually very simple and inexpensive (i.e., no drywall, simple plumbing, plenty of ground clearance underneath, access underneath at any point by removing skirting, window a/c, simple electric furnace). Most importantly, the widget we are all selling is a roof over a family's head, not a lot. Only POHs can provide this. I would suggest a Craigslist ad to test demand in your market. Keep it generic if you prefer. Demand for a $500 roof may leave you shocked. Good luck!