How to Wholesale a Mobile Home Park!!

Question

Hello all,I have a highly motivated seller who owns a mobile home park. Can possibly be my very first wholesale deal. Already have a buyer that’s interested if I can get it under contract.But I have NO CLUE where to start. Don’t know how to figure out an ARV or anything since there are no comps. Any suggestions??I was told that it’s totally different than wholesaling homes in that I may not need a title company and that it is more of a commercial wholesaling deal. I really don’t want to leave money on the table.Any advice would be greatly appreciated!

Geordy Rostad · Answer

@Tony ArdisonThe value of a mobile home park hinges entirely on the net operating income. If the repairs can raise that income level, then you'll be golden.What sort of repairs do you propose? How is your buyer going to add value to the park and how much will it cost him to do so? You can't just go in a MHP in boot everyone out and refill it later. That doesn't work too well.Here's a big pitfall for you though and something you need to find out first... How many of the homes are owned by the park? Ideally, you need to have NONE of the homes owned by the park. you could own them in a separate company or you could sell them on contracts to all of the people renting in the park but the MHP shouldn't own more than a very small fraction of the homes.The homes are personal property and thus can't be rolled into the commercial loan. You need to separate the value of space rent from the value of renting the mobile itself. Base your purchase value on the space rent only income.Selling the homes will decrease the income but will increase the ability to obtain a loan.Another way to add value is by filling empty spaces.Where/what is the park? How many spaces? Doublewides or singlewides? Self-managed or onsite manager? RV spaces or is it a pure MHP? Sewer or septic? Average age of the homes? Average current space rent? How many park-owned mobiles?These are all the questions you need answered just to get started.You should also speak with a commercial lender about the property. Find a local credit union who has a branch close to the park and discuss what it would take to finance it, any issues, what the value might be, and how to increase the value. Not all commercial lenders necessarily do MHPs do it might take a few tries.

Frank Jiang · Answer

@Tony ArdisonCan you please ping me details of the deal (location, CAP rate, NOI, etc)?Sorry, just saw your subsequent post that it's for a single trailer. Just FYI, typically the trailer owner does not own the land that the mobile home parks on, they rent the lot space. You should clarify with the owner exactly what it is he is trying to sell to you.

Jordan Moorhead · Answer

@Tony Ardison get a contract signed and assign the contract. Same way you do with a SFH. Send it to me too, I might be interested.

Tony Ardison · Answer

What he explained to me was there were other mobile homes on the lot before. Some years ago. But they sold them and he didn’t need any more besides the one he has now. There’s already like 4-5 different the water hookups which he showed me.

Geordy Rostad · Answer

@Tony ArdisonThere may be lots of room for more mobile homes but does the zoning allow for it and will you have enough room for drain fields, enough well capacity, etc?

Frank Jiang · Answer

@Tony ArdisonYour deal is more complicated than the standard sale of an established mobile home park with stabilized rental income. It sounds like it would actually be more of a development project. You'd likely need a specialist as a buyer. Here's a good article describing the risks inherent with that sort of project. Best of luck!

Tony Ardison · Answer

@Frank Jiang thanks Frank!Yes, he said he owns the land and everything on it. Which I’m guessing is why he’s asking for $75k.

Tony Ardison · Answer

Thanks for the feedback guys!I just left the appointment with the owner & it’s actually only one mobile home on the lot but it is about an acre of land. There’s 2 big garages on it but a lot of room to put other mobile homes on it if we want.He’s asking for $75k for it all.There’s also a home next door to the land that belongs to his family and they’d be willing to sell it for next to nothing. I’d probably knock it down and put more mobile homes in its place. And to the other side there’s an empty Mobil home that another owner is willing to “give away” for free. Not sure how much it will cost to repair yet tho.The trailer that’s on the land now is the one that he lives in & it is move in ready. Great condition. Can rent for probably $750 a month.Does this sound like a good deal for $75k? Or should I talk him way down...?

Tony Ardison · Answer