Mobile Home Park Questions and Advice

[Robert Lindsley]

Hi there,

I have been interested in mobile home parks for a while.  Over the past year I've been researching and running numbers on multiple parks but haven't found anything that financially makes sense.

Last week I found a park that looks to be an ok deal.  It's a small park (17 units) and it's cash flow positive out of the gate and has seller financing (a huge plus for me).

But after doing some research on the park, I found some concerns:

- 3 months ago, a couple was arrested for making meth in one of the homes
- There's a level 3 sex offender living in one of the homes

The park definitely needs cleaning up, but those two things so far are the scariest to me.  I have no idea how to even approach these issues.  

Can I kick these people out?  What can I do with the home that the couple was making meth in?  Can it be 'cleaned up' or should I just junk it?

Any park I buy, I would want it to be a place where good, family oriented people could live.

Here are the financials:

Purchase price: $164k

Finance amount: $129k @ 6% for 20 years

Monthly income: $4,480

Monthly expenses: $4,022 inc:

- Repairs 7%
- CapEx 7%
- Vacancy 7%
- Maintainence 10%
- Taxes $1142 per month (yikes!  This is the scariest financial expense)
- Water $462 per month
- Mortgage payment $923 (seller financed)
- Misc other expenses

I'm going to try to figure out a way to lower the taxes.  Also I'd like to try to see if I can meter the water individually removing that expense.  Finally, I figure if I can clean up the park I can begin the process of raising the slip rent making it more profitable.

What do you think?  Is this something I should put my time and energy into?  Is it worth it given that I have to deal with sex offenders and people cooking meth?

Thanks!
Robert.