Distressed MHP Fix and Hold in FL

[Brian Davison]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $1,200,000
Cash invested: $1,000,000

Distressed 28 units MHP purchased under consent order. Cleared legal issues, removed non compliant tenants. Rehabbed some units, all new new infrastructure, roads and sewer and laterals to existing waste water treatment plant.

What made you interested in investing in this type of deal?

In the investing landscape after Covid we turned back to our roots (MHP) as it seemed to be the only asset class in a competitive state that was not saturated.

How did you find this deal and how did you negotiate it?

Private listing, negotiated price based in distress of the asset.

How did you finance this deal?

Traditional local Bank financing.

How did you add value to the deal?

Cleared legal issues, new roads, new sewer, cleared out non-compliant tenants, rehabbed units and houses on the property and gated the community with new signage and lighting. Next we plan to double the pad count of the property. Currently 28 units - can go to 50.

What was the outcome?

Work in progress going according to plan, 2.5 years in a 3-5 year project.

Lessons learned? Challenges?

Letting old tenants stay for cash flow while we got engineering and planning done was a challenge. I'm not sure how to get around it, unless you have enough money to just clear out the property all at once and make it a traditional construction project that does not cash flow while rehab is under way.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I do recommend my lenders and contractors. Contact me for that info.