All Forum Posts by: Mark Brown

Thanks for all the advice guys. Seems like there is plenty to do... If we end up doing this deal, I'm going to deduct some of these reno costs from my offer for sure. I looked online yesterday at what a $10K used mobile home looked like and most of these were in considerably better shape than any of the vacant ones I'm buying. I like the idea of doing the vinyl floors instead of carpet. I don't think any of these homes had AC or heat (definitely not central), so that's another aspect I'd have to contemplate. Do you guys furnish window units in your Mobile Homes?

I'm new to this wing of investing. We are currently evaluating a park with 4 vacant park-owned-homes. They are in pretty rough shape inside, but definitely aren't bad enough off that we would scrap them. They need new carpet, a solid clean out, and some of the floors have some water damage which would need to be repaired (along with the spots in the roof that caused the leaking). Cabinets are in place, and overall the fixtures are not terrible (maybe have to replace some door handles and things of that nature). I know this is an incredibly tough question without seeing the homes, but what's the average cost to bring a mobile home in bad shape in the inside up to "rentable condition"? I know what I would and would not live in, but I'm not a mobile home tenant. Exterior of these homes is fine (skirting is one and they all have decks). General numbers on how much you would spend to rehab a home would also be helpful. Thanks much.

Thanks Jack - appreciate the insight.

Sorry - should have been more clear about the utilities.  Park does pay water and bills this out to tenants equally.  Tenants pay eletric, cable, etc.  Water is city water not well.  They are on Septic.  I know the park is a bit overpriced, but the area is fantastic, and the rents are drastically under market. 

If I do a cap rate valuation for this park (using 10%) and assign $3K/home, I come up with $415K using lot rents only and using only the occupied lots (which is 31).  The lot rent I'm using here is $140, which is where rents are currently.  However, if I can get rents to even $175 or $185, I'd be looking at a respectable cash flow.  My goal on the 17 POHs would be to see if I could sell back to tenants over a 3-4 year term.  What do you guys think?

I have a banker who will lend me what I need for the deal with 20% down and a variable rate 30 year loan, fixed at 5% for 3 years.  Not sure what the cap would be on the rate.  Rate is tied to LIBOR.  ARMs make me nervous, but do any of you use them frequenly for MHP purchases?

This is very helpful guys. Thank you

OK - need the forum's advice on evaluating this current deal.  38 total pads, 31 of which are rented, 17 of which are park owned homes (so the mix is 14 pad only rentals and 17 park owned homes).  The location is really good (within 10 miles of a city of 200k) and there are not other low income housing units within a 20 mile radius.  The asking price is $500K, which seems high to me, but based on that price, I'm coming up with about a 13% cap rate.  Lot rents are currently $135/month (which is way below market, market is around $200).  POH rent for about $200/month.  The POHs are older (about half are 15 years old and the other half are 20 years old).  Park is on septic, and does not have water or any other utilities submetered.  If I do my calc and take 31 pads @$135 and use a 60 multiplier, I get $251K value.  Assuming this, that would mean that the POHs are going for about $14K each... Initially, I thought this price was way too high, but the market data is great, and if I could get rents to $200/month, it seems there is much upside.  Can you guys help me with assigning the value to the park owned homes?

Yeah - I come up with about an 8% cap rate on this if I use a very generous expense ratio of 35%.  I did find out that the lot rents were $200 vs $175, but this is still not an acceptable rate to me.  I may counter with what I think the park is worth, which is under $200k... Good news is that I don't see any other investor who would be willing to take this on at the nearly $500k asking price... Financing alone at that would be a nightmare.  Thanks to all for replies.

Very interesting... I've never even heard of such, but that appears to be what he is trying to do.  I just wanted to make sure I wasn't missing something here, as this seemed to be about double what the value should be.  Thanks

Thanks for the replies guys.  Really appreciate it.