All Forum Posts by: Ryan Groene

That is probably a fair price to start with, not sure if hell take it, but you never know. I would assume a 50% expense ratio because your lot rent is still below $300 mark and the % to run a smaller park is very comparable on a per lot basis up until the 75-100 space mark and/or you have over $400 in lot rent.

are you going to manage this thing your self?  and do you ever plan to move from the area?

if you answer yes to either of these questions, consider that your time is worth money and what is your exit strategy. IF you dont' ever plan to move further than a 3 or 4 hour drive, then youll have no issues managing this thing and continuing to operate it.  Smaller parks do take a little more time to exit if you ever go to sell...especially is more rural places

Private message me....

@Jon Dorsey...the 3 point spread between your interest rate and cap rate is a rule of thumb in order to achieve other return parameters and standards of what others look for in this industry.  It will give you double digit cash on cash return with typical financing and other assumptions that would be considered normal when analyzing a park.  The standards to start to erode though when you have a park that is above $300 in lot rent, because your expenses will typically be around the same %, therefore you may cashflow a little better if your in an area what market rents are just that high and your not in a crazy tax/expensive area and/or you have public utitlies.

As @Ian Tudor stated, even at the $2mm mark this thing should potentially cash flow nicely and there isn't much work to do.  

With MHP's becoming so popular right now, if the market doesn't drop out, they will be even more popular, and the ever consolidation of the industry, cap rates are compressing because more people are getting into the space that have lower return objectives and are fine with lower returns because they are placing their capital that has historically earned them lower returns than what they are used to based on never investing in this asset class.  

there are a few companies out there that will actually read the meters for you and bill yours tenants.  they read them remotely.  they run about $300-$400 a lot w/ labor.

I think it depends on what you define as acceptable as far as your investment criteria for returns are.  Industry standards for most are earning the cash on cash return of 20% day 1, or within the first 30-60 days.  Deals are common like this where if your buying turnkey parks, your going to pay a lower cap rate, and get lower cash on cash return.  Or if your okay with your valuation and want a stabilized asset because your capital or investors capital is a 1031 and/or has an expiration, then i would potentially look at doing the deal. 

Assuming that your not getting owner financing at like 5% down or something crazy, then yes your valuation isprobably based on what @Paul Bowers stated, that it looks like your looking at around a 9 cap, with low value add potential.  This would be more of a cash flow play and forced appreciation over time.  

I agree with @Ryan Murdock that expenses are pretty low for the 25 POH's.   You could run this as a horizontal apartment if that is your goal.  But banks won't underwrite it that way, they only take the land portion(lot rent) portion into account mostly when underwriting and determining the value of the park.

Not sure if it city water/sewer or well/septic.  IF its well/septic, budget for a little more expenses on the yearly cost, and on the backend, plan for something to go wrong....meaning raise a little more money than needed or put it into your analysis of a park for future capital expenditures.  

Also, agree with @Jon Dorsey that you shouldn't cap that rentals.  you should have too seperate incomes/expenses for such items.  and then it can all flow into one statement.  On the back end, if you ever go to sell the property, investors are going to want to see the breakout of each.  

Average cost per pad is typically around $200-400, depending on labor rates and the type of meter you get. It also depends on if your getting the new meters which can be read remotely, or if you still want meters that need to be read by either the manager or you.  You could either buy them yourself and have a plumber install them, or you can higher it out and that will include the price of the parts as well.  Direct read are around $70-$100 per meter, and remote are probably around $100 to $150 more than these.  

There are a few companies out there doing this. I would go with the more expensive remote readers, because its one less item your manager/greeter has to do.  especially on a smaller park like this, everything counts when it comes to the budget.  Your manager may only be part time anyways and might not have time to do the reading, and then you have to invoice the water/sewer bills each month.  Or it may be worth doing if you feel like you want more hands on experience or live close by.

Some people budget for about $500 a pad just to be safe.  

Check city laws, but submetering water is normally okay by terms of the city, as long as its public water and not a private system.  You mainly just want to pass thru the cost, don't up price the tenant for usage/labor cost to read the meters etc.  This is where you can get into trouble.  

Also, i would budget for only collecting about 75%-80% of the total water/sewer bill because like rent, tenants don't always pay their water as well.  

I don’t think they have one. Shoot me a message with your email and I can help you out. 

cap rates are typically in this order from lowest to highest....multifamily, self storage, mobile home parks.  

MHP's and self storage used to be hand and hand when it came to cap rates, and still are very close, but as self storage development and consolidation of that industry has taken place...just MHP's are set to do over the next 5-10 years, MHP's have set themselves apart here recently, but they are getting lower and lower for on market deals.  

Mulit family is typically 5-7% cap rate, self storage, 8-11% cap rates, and MHP's 9-11%.  These are historical numbers and change based on what area of the country your in.  

Sometimes the county records will tell you if they have city water/sewer or private. Also, when you look at satellite images, you can see whether or not they have a treatment plant or lagoon...i know you were interested in well vs. septic. Also, you can have a VA or someone call around to the parks and state they are an appraiser doing market research and ask what the lot rent, if water/sewer is included, and what type of water/sewer they have..

another way is to look at some single family homes nearby and sometime the county records will be included with that as well.

some states have public records of the parks that show this.  

Another route is to reach out to the state EPA and see if they have a report of every customer that reports to them based on regulations they have to follow if they do have some private utilities.  you can basically back into your database that they then have at least sewer.