Mandeville, LA · Member since 2018 · 42 posts · 7 votes
I have come across a trailer park deal involving 9 double wide trailers on 1/2 acre lots each. There are six lots together and three down the street. Combined rent of all double wides is 5900 per month. The asking price for the properties is 250000. They have separate meters and septic tanks. They are near a military base with good schools and have been well maintained. Tenants are responsible for yard maintenance. What do you think of this deal? Do you have any books/ info on trailer park investing that you would recommend?
Real Estate Investor · Ste. Genevieve, MO · Member since 2009 · 363 posts · 944 votes
6y
This is not really a mobile home park deal, right? It would be more accurately portrayed as 9 rent houses that just happen to be doublewides.
I would think that what you should look into doing here is to surrender the titles to the doublewides to the state (which converts the mobile home to a real property asset) and then look at it as 9 single-family homes on 9 half-acre lots. When you look at it like that, you are paying around $30,000 per house and lot. Then evaluate that as a single-family home deal and see if it makes sense.
Mobile home parks are all about land ownership. In this case, that's the tail wagging the dog. The big asset here are the homes. You don't have enough scale with only 9 units to make any money from the land rent alone.
Real Estate Broker · Asheville, NC · Member since 2016 · 27 posts · 12 votes
6y
Alecia, I'm also very interested in MHP investing. I would recommend the Mobile Home Park Investor's podcast episodes 1-12 a must listen prior to jumping into a deal. I really love the asset class and look forward to investing in it myself in the near future and would love to share what I've learned during my research. PM me if you're interested.
It sounds like you could have a decent little mobile home park on your hands here. I'd highly recommend listening to some podcasts and reading some blog posts before you jump into this. Likely, you are overpaying at $250k. When you evaluate the deal, make sure you are only caping lot rent, not total rent. Expenses for park-owned homes are much higher than if it were tenant-owned. This is why we don't treat all the income as equal.
Check out @Frank Rolfe's Mobile Home Park Mastery podcast. Also, Glenn Esterson has written a solid, up-to-date book on the subject called "The Mobile Home Park Manifesto." Give this a read too. Lastly, check out @Daniel Ryu's youtube channel for tons of great info for MHP investing.
Please, feel free to reach out anytime if you have questions or just want to chat about MHPs!
Real Estate Investor · Ste. Genevieve, MO · Member since 2009 · 363 posts · 944 votes
6y
This is not really a mobile home park deal, right? It would be more accurately portrayed as 9 rent houses that just happen to be doublewides.
I would think that what you should look into doing here is to surrender the titles to the doublewides to the state (which converts the mobile home to a real property asset) and then look at it as 9 single-family homes on 9 half-acre lots. When you look at it like that, you are paying around $30,000 per house and lot. Then evaluate that as a single-family home deal and see if it makes sense.
Mobile home parks are all about land ownership. In this case, that's the tail wagging the dog. The big asset here are the homes. You don't have enough scale with only 9 units to make any money from the land rent alone.
Mandeville, LA · Member since 2018 · 42 posts · 7 votes
6y
Hi Frank,
Thank you so much for the reply,
You are correct, it's not a trailer park. It's 9 lots with trailers. Seller owns both the lots and trailers and rents them all between $600-$750 each.
So if the trailers get "married" to the land and get treated like 9 single family properties then we would see how the 30K looks compared to other mobile homes on land, is that right? I know most of the comps for trailers on properties for sale in that part of the state are about 60K-70K and up. Knowing that, how does this deal look using the numbers from the initial post, assuming the trailers are in decent condition? We will look at them tomorrow. Thank you again for the comments.
1. When you're pricing potential re-sale value, do you see the end buyer as an investor who will continue to rent them out or someone that wants to buy it to live in?
2. If the typical comp sells for 60-70K, why do you think they're being sold at such a discount?
Mandeville, LA · Member since 2018 · 42 posts · 7 votes
6y
Hi Frank,
Thank you so much for the reply,
You are correct, it's not a trailer park. It's 9 lots with trailers. Seller owns both the lots and trailers and rents them all between $600-$750 each.
So if the trailers get "married" to the land and get treated like 9 single family properties then we would see how the 30K looks compared to other mobile homes on land, is that right? I know most of the comps for trailers on properties for sale in that part of the state are about 60K-70K and up. Knowing that, how does this deal look using the numbers from the initial post, assuming the trailers are in decent condition? We will look at them tomorrow. Thank you again for the comments.
Mandeville, LA · Member since 2018 · 42 posts · 7 votes
6y
We looked at them and the seller gave some good info. They are all double wides with shingle roofs built in 1998 except for two singles (not in the greatest shape) Property taxes are $1950 A year For all of them. All on separate parcels. The seller has a couple of maintenance guys to keep up with repairs so we wouldn’t have to find anyone. They have put new flooring in most of them and seem to been keeping up. They look in good condition on the outside. We were able to go into one that was getting ready for a new tenant and it was not bad. All the other units are similar in layout. They are always occupied so no vacancies. Seller looking for different type of investment so wanting to sell. They have given all serial numbers and manufacturing data for each one. Need to find out about AC or plumbing issues. Know there are maintenance issues with these always but with a strict inspection schedule you can avoid most “catastrophes” My husband grew up in a trailer so these don’t scare him. The biggest issue is the distance from where we live. About an hour and a half. Thoughts...