All Forum Posts by: Jefferson Lilly

Aaron -

If you are indeed looking to value a mobile home (not a mobile home park), then the value of homes varies widely with the park the home is in, the economy the park is in, and the condition of the home.  If you are buying a home that is 'somewhere else' and you are looking to move it onto your own land, or into your own mobile home park, then you should deduct the value of the move (around $4,000).  All that said, for homes that are set in decent parks and that are in good condition, I'd say 1960s/70s homes might be worth $2,000 - $5,000, 1980s homes might be worth $5,000 - $10,000, 1990s homes might be worth $10,000 - $15,000, and 2000-and-newer homes might be $15,000 - $40,000.  All this assumes we are talking about single wide homes.

If you are acquiring a mobile home park that comes with homes, then you should run some test ads to determine what you can sell the homes for on a note.  That is the value you should ascribe to the homes in such a 'package purchase.'

But whatever you do, don't use NADA Blue Book Value.  Those numbers are way high.

My 2 cents worth,

-Jefferson-

(Post edited: Website / contact info etc. should be put in signature - not in the post!)

I'm intrigued by Jay's comment about timber land in the NW.

My only experience has been with mobile home parks. But I did look into apartments, self storage, and SFH (both buy-and-hold and fix-and-flip), and at least of those, MHPs are the best by far. We typically double our money in the first year (e.g. put down 25%, and improve the property's overall value to 125% of what we paid for it within 12 months). Our cash-on-cash returns tend to be 25% - 30%, and with all the depreciation that's nearly entirely tax-free.

My 2 cents worth,

-Jefferson-

Run, don't walk from this deal.

Get yourself to Bootcamp to figure out why to stay away from properties like this (bad location, bad occupancy, too much rehab).  This is probably not a park for anyone to own; it is certainly not a newbie's first park.

My 2 cents worth,

-Jefferson-

I'd be no such person/company exists.  (But then I post on Bigger Pockets so I can be proven wrong and learn a thing or two..!)

I'd say your best bet for a loan amount that small is going to be either a local bank, or seller carry.

Brandon -

I've been in the business 8 years.

But as regards what I spent time on when I was getting started - I spent my time dealing with problem tenants, mostly. I made the mistake of renting mobile homes. I did charge a rental premium ($650 vs. $550), which made renting profitable from a P&L perspective, but I was not valuing my time as an expense into the P&L. So now I only RTO. We still have turnover, of course, but it is around 1/5th the level of renters. Problem tenants damage homes, scare away other tenants, etc. So embrace what I call the 'J curve.' Your profits will dip at first when you kick out bad tenants, and then go much higher 6 - 9 months down the road. You want to build a community of folks that want to own homes, not rent. Enforce no-pay, no-stay. Kick out any drug dealers, sex offenders, etc.

My first park was also an infill project, and I was my own General Contractor getting competitive bids, overseeing the work being done, etc.  I now outsource that to others.

If you buy a park with (nearly) all resident-owned homes, and then infill with your homes and RTO those to keep the ball rolling with tenants that exhibit pride of ownership, then you'll spend very little time on your park - I'd guess about 1 minute/week/pad (assuming you outsource your bookkeeping, GC, management, and maintenance).

To your continued success,

-jl-

Rohit -

I'm sensing you are about to make a big mistake.  The MHP business is very complex.  My BP Podcast will help you get an appreciation for that, but there is much more to it than that.  You should not buy a park without first going to Bootcamp.  You are asking a lot of beginner questions, which is good, but there is just way to much to go wrong in your diligence process if you don't know what to look for.  Go to Bootcamp, get the '30 Days of Diligence' book.  Then you'll be 'armed and dangerous' and ready to buy your first park.

Good luck,

-jl- 

Frank & Dave do their Bootcamps about six times a year in various cities nationwide.  They are curiously secretive about the future dates/locations, but you can contact Brandon Reynolds and ask him to tell you exactly when/where the upcoming Bootcamps are.  Tell him I sent you.

-jl-

@Watson Smith -

Too much makes MHPs vastly superior to SFH for me to cover in one email, but I recently did a BP Podcast on this exact subject answering your question:

http://www.biggerpockets.com/renewsblog/2015/02/26...

Best,

-Jefferson-

Tim -

Stop!  Get yourself educated.  Get to Frank & Dave's Bootcamp.  Don't do any deal until you get smart about this complicated space.  The diligence process must be done correctly - water pipes, sewer pipes, home inspections, competitive research, research on any violations, running test ads, researching the economy, etc., etc. Small deals like this DO NOT trade at a 10% cap rate.  More like 15%.  And I'm not even sure it's worth that depending on the condition of the homes and what market it is in.

Nicholas -

Before you buy a MHP you really, really need to get educated first.  Attend Frank & Dave's bootcamp.

Also, although no substitute for a weekend-long Bootcamp, take a listen to my podcast here on BP: http://www.biggerpockets.com/renewsblog/2015/02/26...

But a few thoughts:

* Odd that the park is 10 acres but only has 23 pads.  Most MHPs have a density of 10 homes/acre.  If you've got 10 acres, you should have a 100-pad park.  So are the lots very large?  Or is the park 77% undeveloped?

* Don't develop vacant land.  It has no value to you and is too expensive to develop and then buy mobile homes to buy and bring in.  MHs can not (usually) be financed, so you'd have to come out-of-pocket to acquire homes.  

* See if you can reduce the purchase price and let the seller keep the vacant land.

* Septics only last about 25 years.  We tend to stay away from them and only purchase parks on city water and sewer.  For your first park, I'd recommend likewise.

* The poor home conditions are a big red flag.  Your park is out in the middle of nowhere and can only attract low-quality renters.