Mobile Home Park

[Claudio Trevisan]

Hey Bigger Pockets!!!

I recently had a mobile home deal come across my table. I do not have a great understanding of investing in MHP; however, I decided to take this as an opportunity to learn. I would like to know everyones opinions on the deal. I will put down all the information I have. If the investment is a bad one please explain what the numbers or situation would look like if it was a good one. If the deal is a good one, please explain why. I want to learn as much as possible.  Also if you like the deal and would like to partner, I am willing to do so. 

Location: Davis Road   Lake Worth, Fl

Purchase Price$399,000

Assessed Value:$350,000

No. Spaces: 13

Cap Rate: 8.50%

Gross Rent Multiplier: 5.50%

Occupancy: 75%

Lot Size: 1.17AC

NOI: $34,000

Details: 13 Pads, only 11 are rented, a cottage and duplex is also on the property for a total of 16 units. Rent is below market rate. 6 @ $500, 4 @ $550, 1 @ $650, Rent and occupancy can be increased. Currently half of the duplex is being used as a storage. Seller owns all land and units on property. Woman lives in cottage for free because she collects the rent. Septic Tank is bad, how bad is not specified. Seller is willing to do owner financing at 5%.

Current Expenses:

Taxes: $11,300

Insurance: Liability $125/mo

Repairs: $1500-$2000 per unit a year

Cap Ex: seller didn't specify. I usually assume 18%. I am not sure what is reasonable with a mobile home park and problematic septic tank. 

Water: City $400/mo

Electricity: $150/mo only for street lights. Tenants pay for their own electricity. 

Lawn Care: $100/mo

Renew Permits once a year: $30 per unit