Mobile Home Park Questions and Analysis

[Derek Vannah]

I had a mobile home park brought to my attention this week from a family friend of mine. The owner inherited the property and does not want to, nor ever intended to be a landlord. I believe I am getting the park at a pretty good discount, however, I am very early on in the stages of reviewing mobile home parks. I have been in real estate for roughly 7 years and had a 5-year span in property management where I managed about 45 residential condos so putting the pieces of the property management puzzle together will not be an issue. I am more worried if I am missing anything with my evaluation of the property and wanted to see how others in this group would evaluate something like this.

Here is the current information I have:

25 Pad Park

5 Pads Rented at $295/mo on average ($300-$350 market rate for the area)

-$17700

14 Park Owned Homes - renting from $600-$800 based on condition. Average $671/mo

-$112800

6 Vacant Lots

Total $130,500

The expenses that were presented seemed to be quite low to me so I have adjusted them by about 25% after doing some background work and calling local vendors that are familiar with the park.

$37,500

Am I missing anything when evaluating the property?

From an evaluation standpoint, how big of a disadvantage am I putting myself at knowing the park owns more than 75% of the homes in it?

There is a park down the street from this one with ~50 lots that just sold at a cap rate of 8.7%

         -That park only had 5 of the 50 as park owned homes.

         -That park was in worse condition than this one is.

I am not going to need or obtain bank financing here, but will I be able to see it as a cash machine on the back end knowing that the park continues to own 70-80% of the MHs?

Would it be a bad idea to purchase 6 more mobile homes and put them on the 6 vacant lots to obtain more rental income?

Any help or questions I should consider would be very helpful, thanks!