Mobile Home Park Investing and Lessons Learned

[Andrew Lekowski]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Elba.

Purchase price: $90,000
Cash invested: $13,000

10 unit mobile home park in rural Alabama. Includes 9 park owned homes and 1 single family house (2/1).

What made you interested in investing in this type of deal?

1) Forced Scalability. Assuming ownership of multiple units forces you to put the systems in place to run your business. Before this deal, I self managed, self lawn care, self everything.
2) I love the asset class! Recession proof, good cash flow, lots of doors.
3) For this particular deal, being located in rural Alabama at a

How did you find this deal and how did you negotiate it?

My partner, a West Point graduate that was in the year ahead of me, approached me with this deal. He found it on Zillow the same day it hit, and he knew I had run the numbers on several other Mobile Home Parks for sale in the area and had been researching buying a mobile home park for myself. The numbers worked at listing price, so we negotiated the Seller pay all closing costs and got it under contract within 24 hours of listing!

How did you finance this deal?

Financed through a local regional bank in the area. They offered a 20% down, 15 amortized commercial loan with a 5 year balloon. Financing was the tough piece for this deal: we fought hard to get the 15 year amortization. All other banks only met us at a 10 year. We also fought hard with our lender to give us the option to sell all mobile homes on the property and keep the proceeds, so that if we decided to sell off the park owned homes, we could do so.

How did you add value to the deal?

Right off the bat, two homes became vacant and we renovated them and put them back on the market with increased rents. Old owner had tenants pay far below market value rents, so we intend to raise rents as each home turns up vacant.

It appraised for $20,000 more than our purchase price, so we are sitting at a good equity position. Other than that, we plan to add value through systems and automation (old owner used to do everything himself)

What was the outcome?

Currently, we are cash flowing well and intend to keep doing so!

Lessons learned? Challenges?

Taking action beats lack of action every day. From the beginning, with the current rent roll, we had fairly thin margins on cash flow. After running the numbers many times, we decided to go ahead and do it. We jumped in, and so far the journey has been great! There is truly no better education than a hands on education.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Here is our list of vendors that we would recommend!

David Bailey at First National Bank of Hartford
Kaye Ellis with Lake Realty (Listing Agent)
Malissa Gilley at Century 21 Regency (Our Property Manager)
Wes Davis with Trophy Turf (Lawn Care, great service)

Also, shout out to my partner, Austin Montgomery, who taught me Real Estate Investing before I even got started! Glad to be tackling on a project with him--very knowledgeable active duty real estate investor and Blackhawk pilot.