First Mobile Home Park

[Dan V.]

Investment Info:

Mobile home buy & hold investment in Newport News.

Purchase price: $350,000
Cash invested: $100,000

33-lot mobile home park, with 30 mobile homes and a single-family house.

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

Great cashflow.

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

This was brought to me by a wholesaler. He found the deal thru an agent but was struggling to obtain a loan so he offered 50/50 partnership to help with the financing. The term initially involved partial seller-financing but the seller decided not to finance anything. We offered the full asking price but made sure that we have enough time to do our due diligence and secure financing.

How did you finance this deal?

Commercial loan from local credit union funded 70% of the purchase price and my partner and I contributed cash on the 30%.

How did you add value to the deal?

The park is 50% occupied when we bought it and most of the vacant units need major rehab. We sold all vacant ones to investors and collecting lot rents on them. We set up new park rules and leasing guidelines and slowly cleaning up and improving the park condition.

What was the outcome?

We are on track with our projections. In just 3 months, we were able to get it rented at 95% by selling all vacant homes to mobile home investors and collect lot rent only.

Lessons learned? Challenges?

Finding bank/lender to fund mobile home park is a bit of a challenge. I even prepared a business plan for it, including 1st year proforma P&L and 10-year projections. I reached out to all types of lenders that I know and ask for referrals from various investor groups but despite showing some really good numbers, we were denied by most of them. Luckily, one local credit union took a chance on us and funded the deal. We are also self-managing the property, it is stressful but a good way to learn.

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

Yes, we worked with commercial agent and local credit union.