Dumpy Mobile Home Park

[Tim Crumley]

Came across a dumpy little mobile home park today for sale for $47k.

6 lots 5 with homes and one empty.  All park owned homes.  All on city water and sewer.

#1 Rented for 400.  #2 rented for 350 #3 Undergoing renovation and not rented. #4 empty, no home #5 rented 350 and #6 rented 400.

What do you all think the likely hood is of getting the tenants to convert to a rent to own situation?  I was thinking of a lot rent around $150 should be doable.  

So 150*4(rented lots*)*12*.7(30% expense reserve)*10=50,400.  Seems like a good price on the park. At a 10 cap I would be getting free homes.  Now understand that these are not nice 2015 model homes but fairly old single-wides but free is free right.

Thoughts?

[Jefferson Lilly]

Tim -

Stop!  Get yourself educated.  Get to Frank & Dave's Bootcamp.  Don't do any deal until you get smart about this complicated space.  The diligence process must be done correctly - water pipes, sewer pipes, home inspections, competitive research, research on any violations, running test ads, researching the economy, etc., etc. Small deals like this DO NOT trade at a 10% cap rate.  More like 15%.  And I'm not even sure it's worth that depending on the condition of the homes and what market it is in.