All Forum Posts by: Michael Baradell

Hey BP!

We are purchasing a mobile home park in a community of about 16,000 people. There are several smaller towns along the outskirts that have a few thousand people in each. The closest large metro are is about 2 hours away. Our park is 55 pads and has 12 active pads. 11 mobile homes and 1 commercial building (Church).

There are 3 nearby parks within a 5 mile radius and all are near capacity. All of these parks, including mine, has all older mobile homes. There are only a handful that are less than 10-15 years old. Most are metal on metal and are not appealing to look at.

Market rent tops out around $550-$600 and lot rents range from $150 (all three surrounding parks) and $190 (my park)

My park has a history of poor management and just recently has started cleaning out the bad tenants. 
My plan is to bring in new mobile homes utilizing the CASH program (we are already approved) to change the look and demographic of the park. My concern is, if we bring in new mobile homes, can the area support the higher prices? My preliminary ads show that there is definitely a need for affordable housing. 

My question is, how can I determine if new houses are the right move or if we should stay par for the course and bring in old homes? 

Hey BP!

I am analyzing an RV park, which I am completely unfamiliar with. How would due diligence, finances, expectations be different for an RV park vs MHP?

@Frank Rolfe wow! I truly appreciate the insight! I currently have the park under contract for $330k. We are approved for the cash program, and will likely utilize that. Would you see any issue with doing so? Also, would you suggest going with 2 or 3 bed models? I ran a test ad yesterday for a 2 bed 1 bath at $550, including lot rent, and I’ve had 6 people reach out so far. 

@Frank Rolfe I'm curious your thoughts on this park overall. It has 11 current TOH renting at $190/month lot rent, 1 Building that is rented by a church, $300/month, and 7 vacant MHs that need repair. The park has 55 pads. City utilities all billed to tenants. City streets. I am having a hard time valuing this park. I love the upside potential, however, how much value do I attribute to "upside" if any? If I finance this park, I will essentially need 19 TOHs rented out to break even, including PITI and all expenses. Being that these home are on site, but need rehab, should I give them any additional value aside from the value of the home itself? Any insight would be greatly appreciated!

@Mike Reynolds I have a call with him tomorrow. I will let you know

@Frank Rolfe I am setting up an add this evening. According to the seller, he recently rented one out in two days and had over 40 calls on it. This park is in a small town in KS that has about 20k people. 

I have a lender already in place that will go 20% down, 20 year amortization, 6% interest rate, 5 year balloon. 

Also, much of the deferred maint. was repaired this past year. 

Hey Guys,

I am looking at a park and am in the middle of due diligence. I've called a few nearby parks and the lot rents have brought up a red flag that I would like some input on. 

Park I am targeting 

55 Spaces (MH's only)

Lot rent $190 nothing included

Public roads and city utilities 

Occupancy is 30%

Park Comparison #1

Allows MH's and RV's 

Over 80 spaces

Lot Rent is $145 nothing included (RV rent is $450/month)

Park is at 100% occupancy including RV's 

Park Comparison #2

Allows MH's and RV's

145 spaces (45% MH's)

Lot rent is $190 (Includes H2O, sewer, trash) 

About 80% Vacancy 

The park I am targeting has not been run very well. Very bad reviews on google. The other parks have great reviews. 

My concern is the obvious. Being that the lots rents are higher than other parks and the vacancy is lower, can I overcome this hurdle by improving the park and making it a nicer place to live. 

Or

Is it too risky because of the cheaper, more experienced competition?

Hey BP!

I’m curious if anyone out there has built a successful business revolving around renting single mobile homes? 

@Frank Rolfe Thanks for the insight. Could you help me understand why it is not ok to look at this deal as total rent vs just lot rent? Being that they are new mobile homes, essentially I should be able to own these for quite some time before thinking about selling. 

If each home will rent for $900/month, thats a gross of $6300. Assuming 50% expenses as you mentioned (although we will have a warranty to fall onto that will cover just about everything for the first five years), we are at $3,150/month. Financing would run around $2200, giving us a rough net of around $1000/month. 

If my goal would be to pay it off around the five year mark, why would this not be a deal to move on? 

@Austin Works I’m green as well when it comes to mobile home parks, but here is my understanding. 

You always need to have a baseline on how you determine value for these. I would find the average lot rent for the area, and then determine the value for that.

Then, figure out a value for each of the mobile homes and add that to the value you determined from lot rent. If they are older homes, you may 

@Frank Rolfe Not to hijack Austin's post, but perhaps he can gain from this analysis as well. I would love your thoughts on this one. 

I have the ability to purchase a 1 acre plot of land and zoning allows for me to place 7 possibly 8 mobile homes. I would love your thoughts on this one. 

The numbers: 

Lot purchase: $30K

New Mobile homes:(This is a requirement per the city) $45K per home (this includes pad and all utility hookups) I meet with a dealer yesterday so these numbers are accurate. 

City water and sewer

Land prep and gravel driveways: $15,000

Lot rent in the area is around $250, however, I would keep these all as rental for at least the first 5 years as that is the length of the warranty the manufacturer is giving me. My goal would be to not take a profit for the next five years and pay off the project completely. 

All in the total project should cost around $360K. 

I would keep these as rentals being that they are so new. I also own a property management company, so that would be in house. The market rent for the homes are $900/month. 

I own several single family homes, but this would be my first venture into mobile homes. My ultimate goal is to consolidate everything and own larger mobile home parks. I would love any insight you could offer.