All Forum Posts by: Michael Baradell

What would you do? Buy or pass??

I have the opportunity to buy a parcel of land that can house 3 mobile homes. The city requires the mobile homes be brand new in order to have as rentals. City water and sewer.

Here are the numbers:

Lot $37k

$5k to prep land and remove an old small house.

Mobile homes $45k each (includes installation, pad, electrical, plumbing and skirting)

5 year warranty on each mobile home.

Taxes are $1500 year for everything

Insurance about $2400/year total

Rent will be $900/month per unit.

I will buy the lot and first mobile home with cash and then put a mortgage on it to finance the other two mobile homes. Will take 4 to 6 months before all are in place.

Thoughts overall? Any insight is appreciated.

Hey BP!

I am purchasing some land that could house 3 possibly 4 mobile homes. The city requires the homes must be new in order to rent. I have not purchased mobile homes before. Any advice on what to look for or available programs that may be available?

Any insight is welcomed. 

@Steve Vaughan I am also an agent, so some of those costs are very low for myself. Here is this exact property in the Bigger Pockets calculator. Some variable, back end financing I am assuming terms because I would not refi until 10 months from now due to the great terms I have on the owner financing I have up front. Also, I manage properties, so I only charge myself cost. The property is being completely renovated as of right now, aside from the roof. It is in good shape, but is about 12 years old. As for the other components, they will all be new to only a couple of years old, so that is why I have low expenses for them. Would love your thoughts overall. 

https://www.biggerpockets.com/calculators/shared/139247/ca5de6c0-13f9-4939-9a54-e56bf7e87b4f

Lately I've been torn on which path to take. I typically shoot for Brandon's suggested minimums of both cash flow and cash on cash ROI, and I have achieved that with almost all of my investments i currently have. My question is, is one more valuable than the other? For example, I've recently locked up a property that will be a BRRRR that will allow me to pull out all of my money giving me an infinite cash on cash ROI. However, the cash flow is under $100 month. I will also have 30% equity in the deal as well. My main concern is, although I have no money invested, this doesn't move my needle much in regards to cash flow, which I have always said was my main goal.
I would love anyone’s insight on this. My thoughts are is too simply flip this one, make a quick $25k+ on it, and then roll into a better cash flowing asset. 
Thoughts?

@Mindy Jensen The cost to update the utilities will include the additional 5 pads. The additional costs not factored include: adding electricity to the additional 5 units, paving the driveways (would use either limestone or asphalt), and then the biggest expense and unknown would be bringing in the additional mobile homes. In my market, you can find decent ones for under $10k. An additional cost of about $3500 each unit to move and set them. 

@Mindy Jensen thanks for the insight! Obviously, I want to talk myself into this deal! This would be my first park, although I do own mobile homes as well as other rentals. 

This park is in an area where I do think it could actually work well. If it were managed well, and had up to date utilities, I feel it would be a decent investment. 

Let me ask you this.. If I were able to have the seller take care of the septic and well, would that make this a deal in your eyes? 

My ultimate goal would be to make this a 15 pad park, bring in newer mobile homes, and then sell off all of them to the tenants. 

If all were rented out, at 40% expenses, considering a 7 cap, the value would exceed $350k. 

Hey guys, I would love some insight on your thoughts on value for this small mobile home park.

Park currently has 10 mobile homes. All park owned. 5 are currently rented ($600), 2 don’t have power due to new septic needed, and 3 need to be replaced. 

Park needs new septic and well. Quotes are around $70k. 

There is raw land connected that is permitted to house 5 additional pads. 

Lot rent in the area is around $250.

Most of the trailers are in poor shape, and park has been poorly ran. 
Seller is asking $225k. He is also willing to owner finance. He does not have any records of expenses, so I would assume 40%. 
Any thoughts? 

@Frank Rolfe this was provided to me.

Hey BP! I have two mobile home parks that I am analyzing right now and I am curious on your thoughts. 

First Park: Brand new development with 18 pads. All city utilities in a good area. There are no mobile homes currently on the property, so this adds another huge element. Local lot rents are around $350. New asphalt roads. Asking price is $700K. Cap rate in my area is around 7.5 to 8 depending on location. 

Second Park: Much larger and already established. 108 Lots mixed with 61 RV spots (brand new), one triplex, two cabins, and the rest mobile homes (15 park owned). City utilities, $716K annual rents. List price is $3.5MM

In both of these areas, there is medium to strong housing markets and both are on the outskirts of major cities. Population and jobs are very solid. 

@Travis Lloyd thanks man! Let me get some stuff together.