Mobile Home Park vs selling land+home

[Rich Ferradino]

Hi BP!

I am purchasing 17.5 acres of raw undeveloped land in South Texas with the intent of subdividing and re-platting the land into .7 acre plots and putting a double wide on each lot. My question is would you either sell each lot individually or rent them home out until you have full occupancy and either cash flow or sell to another investor?

Each lot with a 28x76 home cost approximately $44k. For a 28x56 it will cost $36k. This includes the cost of raw land, each lot having city water meters, septic tank, electric, the transport and cost of the mobile home.

The current market for selling is approx $50/sqft and rents are $900-950/mo.

For a 28x76 $44k investment I'm estimating a sales price of 105-110k sales price which is a 60-65k profit per lot.

On renting I would get the 28x76 for $36k. For 15 lots the cost would be $500k but with figuring a bank loan and rent income at $900/mo yearly income= $162k yearly expenses ( not figuring a property manager) = $55k yearly profit= 107k. At a 10% CAP that would be 1,379,500.

I'm leaning towards doing combination. Sell 12 acres with home+land and keep 5.5 acres and have that as cash flow.  Only thing with bank financing is they want the land as collateral, but I'm using a separate bank loan because it was only 5% down. I guess I could come out of pocket and do one sale without financing which would be enough to own the land free and clear. Any thoughts?