10 unit manufactured home deal analysis

[Fabio Salas]

I’m looking for advice/guidance regarding a 10 unit manufactured home deal, on a 0.39 acre lot in FL. These are three modified double wides. Here are the numbers I have so far: Purchase price: $191k Rent: 8 units at $520; 1 unit at $400; 1 unit for a live-in manager. Total monthly rent: $4,560 (2.4% of purchase price) Monthly expenses: Taxes ($200), Insurance ($275), water ($200), sewer ($150), electric ($30), pest control ($50), and cable ($105) for a total of: $1,010 per month. Property manager lives in his own unit, on site, for free. Repairs needed: roofs need replacing within the next 1-2 years ($10,000). A few overhangs need fixing: $2,000. Needs new gutters: $1,500. I am currently under contract to sell one of my rentals in AZ. COE takes place in two weeks. After all sale expenses I expect to have approximately $42k which I will 1031 exchange as the downpayment for my next rental property. This means I will finance approximately $150k, with an approximate monthly P&I payment of $700/month (interest rates on loans for manufactured homes generally seem to be higher). Additional info: 4 units are HUD one year leases 1 unit, the tenant is moving out next month 1 unit is 90 Works (a program in FL that helps people with services such as finding a home) 2 units are on a 6 month lease 1 unit, the tenant is being evicted. Eviction will be completed prior to COE. 1 unit is for the live-in manager Vacancy costs for these homes should average around 10% or less of monthly rent. So, a quick calculation of the numbers tells me I can expect to cash flow $1,000 or more per month. This sounds great, but I know next to nothing about manufactured homes. I know I need a specially certified appraiser to ensure I get the real value, but will the appraisal look at the land and homes separately, or together? From my understanding, manufactured homes are viewed as personal property. Is this true? Or are they considered Real Property if the homes are permanently fixed to the land (the land is included in the sale)? As far as I know, I can depreciate manufactured homes just like a regular home, correct? I ran the numbers based on 0% appreciation. Now I’m wondering if I should run the numbers with a negative % appreciation, as I know these homes tend to go down in value. The current owner has owned these as rentals since 1989, so I imagine they’ve already dropped in value considerably, but I’m sure they will continue to depreciate. Thank you all for taking the time to read this. Any guidance/advice is much appreciated.