Abandoned Mobile Home Park

[Nkuti Ndely]

Hello, I am new to REI and have spent a lot of time learning, mostly about buy and hold for traditional real estate, and I'm getting a real itch to actually get out and start investing. I happened to come across a abandoned mobile home park that is for sale for $30k. I've spent a good amount of time researching the concept of selling mobile homes but not a lot of time buying mobile home parks. On its face, the deal seems intriguing, the park is on 2.9 acres and has 20 lots. It's plausible that lot rents could be in the $250-350 range (I still have to do some research on that). The previous owner said he junked the beyond use homes and has 13 homes currently on the lot. We're still in discussion about detail of the park but this is what I know currently. At a price of $30k, this seems like it should be a good deal, a full park with lot rents set at $250 would bring $5k/month in lot fees plus the opportunity to sell the 13 homes that are already there. What am I missing though? I know there are other expenses I need to add in but I'm green. Any help in analyzing this deal would be greatly appreciated!

[Leslie A.]

First, I think you need to know why the park was abandoned. There must have been an awful reason, I would think. 
How old are the homes?  What condition? 

[Nkuti Ndely]

@Leslie A. The current owner said he bought the park in an auction last year and he heard the water well was neglected and the health department shut the park down. Not even sure where to begin to figure out how to figure out that problem

[Leslie A.]

@Nkuti Ndely

Yes, that sounds like a big problem if he abandoned it rather than fixed it. Maybe you can talk to the health dept and see what the requirements are then talk to a well company about how much it would be to repair or replace. Sounds quite expensive.

[Michael Colebank]

Put it under contract with contingencies on the water and I'm assuming it's on septic. As well as getting it's license reinstated. You'll need inspections on both. But talk to the health dept first. They may tell you there's no way they're reinstating the license.

[Daniel Smithson]

Is the park in a decent metro with access to municipal water? If so, at a $30k sales price, it could very well be worth tapping into that utility and getting the park back up and going quickly. If not, I'd start with the health department and see what is required to recertify the well. 

Also verify the zoning as part of the usual due-diligence on a park to make sure the park is still at least grandfathered in as an MHP. It should be, but I don't have any experience with totally abandoned parks. 

Sounds like an interesting problem to solve!

[Nkuti Ndely]

@Michael Colebank Thanks. I'll look into that