Mobile Home Park Purchase

[Nick Jansen]

I'm looking at a mobile home park that has multiple lease options being used by the current landlord but the numbers seem great.  

It has 42 lots total. 

32 homes are owned by the park

   --10 are occupied for rent between $335 to $655 

   --8 are on a rent to own contracts for $500 or $550. 

   --14 are unoccupied and need a total of about $35,000 worth of repairs to be ready to rent.

8 lots are lot rent only for  $220/lot.

2 lots are vacant.

26 units pay utilities to the city and the remaining are sub metered but currently paying $45/ mo to the park. 

I would need to have park management because it is too far from my home to self manage.  

I don't want to own the trailers because of the maintenance costs so I would be trying to get to all lot rent or rent to own unless convinced otherwise. 

I'm not sure what else to include so I'll open it up for you to tear me apart. 

[Paul Moore]

Hi @Nick Jansen. This may not be what you are looking to hear, but I would ask if you would consider stepping back first and getting some serious training on MHP operations before proceeding.  I'm guessing you are busy, but even so, if you could do a home study course at least it would help you a lot in making this decision.  (Maybe I'm being rude by assuming you haven't, but I'm just saying...). Frank Rolfe, who was on the BiggerPockets podcast in the summer of 2019, has live and home study training available.  And there is a book called Trailer Cash by Jaimie Smith as well. 

You will want to be sure not to directly apply a cap rate to the income. You need to break out park-owned homes separately when calculating the value.  And be sure to consider the ramifications of well and septic vs. city utilities.  

Best of luck!