All Forum Posts by: Mark Gruetzmacher

@JC K.  I would self manage since I live within 5 min of the park plus I already self manage my other few rentals I have at the moment.  But my thinking is that property management should be figured into the expenses along with some snow removal as well.  I think for the most part the owner must let the people manage on their own but there is always that one time where you get hit with enough snow and you need to do something.  

As for expenses I don't think there is much cutting.  Taxes are what they are.  If anything depending on the size of the garbage dumpsters there might be some cutting there as I checked with another company so that could be about $1000 savings.  Not much for repairs listed but I would assume you need to plan for future issues with water and sewer lines.  

There is an old brick building in the parking lot that I think the owner uses for storage or something.  It has multiple doors.  I thought maybe it could be converted to some storage for tenants.  With the 5 vacant lots I think I would try to find other homes to bring to for rentals myself because it bring is a lot more cash flow.  It does take more cash though to bring more in especially considering the year limitation.  But still 5 lots times the lot rent is another 13K a year with not much for expense increase.  If it was 5 of my own units then your talking another 42K.  

Seems like CAP rates at the moment for this property are in the 8-8.5 range which seems too low to me. I guess I would of thought it should be more like 10-14% depending on the quality, location, tenant class , etc.

Return on cash, I am not sure of.  The credit union wants 20% down.  I can use equity in my home for some, most, or maybe all depending on the amount down I need.

Do you own a park Jeronimo C.?

@Rachel H.

@Rachel H. There might be some upside in rents.  I don't think they have been raised in awhile.  Considering  the rents are on the low end of what the other few parks in the are might justify an increase.  I have a home in another park and pay $45 more a month and it is the worst park in the area.  I do not have my home in that park by choice, it was there when I bought it.  That park has also went up in price the last 2 years in a row by $20/yr.  Also considering that most if not all of the homes in the park can't be moved inside this city to another park because of their year makes it hard for people to move even if they have the money to have them moved.  Not saying I would raise them up above what they are worth.  People need to feel like they are getting a fair price for sure.  Paving the roads would not be worth it nor gain you any money in this area.  The cost would be high as the parking area is bigger than the area the homes take up almost.  Crazy why they made such a big area.  

Hey everyone, I was wondering what the typical CAP rate is for parks. Seems to me that it is usually higher than lower but I wasn't sure. Looking on Loopnet they are all over the board and I know if varies based on area. Seems like a lot of multifamily stuff around here is around 8 which to me doesn't seem to great. I try to look at things with a 10% rate for running numbers. Is that not a good idea?

Anyway I also have a small park that I wanted some input on.  Here are some numbers.

24 Spaces total @ $230/month                                                  $66240.00

Less current vacant spaces (5)                                                    $13800.00

Adjusted Gross                                                                               $52440.00

Expenses for 2016 

Insurance                                575

Professional Fees                   748

Misc Office                               143

Repairs/Maint                          317

Property Taxes                        7727

Trash                                         3443

Postage                                         96

Gas for lawn mower                 381

Bank Charges                               76

Total Expenses                         $13506.00

NOI $38934.00

All those numbers are from the realtor.  The park is nothing special but it is decent for the area.  Just gravel area and not paved in the park itself.   It is on city water and sewer and metered separately to each place.  Garbage and taxes take out a huge share.  One thing I don't see if snow removal which kind of surprises me a little but maybe they don't do anything for that.  Also no property management expense.  I am pretty sure the owner does it.

I see maybe a few pluses, maybe save on garbage depending on the size of dumpster and the company doing it.  There is 5 lots open so if they got filled eventually that would bring in another $13800.00.  But that might be a tough sell because of the year limitation that city now has.  But personally I would like to fill the 5 spots with my own homes so then I get added rent so instead of 13800, it would be around  $45000  based on average of $750 rent.   Yes I know not ideal because then there is more hassle and issues to deal with but I already have 5 homes in various parks that I have to deal with.

Rents are at $230 now.  In the same town I pay $275 (garbage included) and $225(no garbage) on some of my other ones.  Lot rent prices vary in the 10 a mile radius from the $225 to up to $375.  Might be possible to raise rents some or take away garbage and have each one get their own service.  But getting their own would be a hassle I would think.  The cost would be about $23 each per month.

What is it worth? Is it ok to barley make anything after debt service? I checked a local portfolio lender and they are 4.75-5.75% for 20 yrs and 20% down. Cash down is an issue as I own most of my stuff outright and also have on CFD house tieing up 90K. I have equity in my home which I can use if I have to for the down but then that is another payment on top of the PITI of the park. Already checked on owner carry and that doesn't seem to be something they want to do.

I make great cash flow on my single mobiles I have but I guess I am looking at it long term and keep thinking that 24 unit park is alot less headache than managing 24 tenants and all the issues that go with it if you owned all 24 homes.  So that is why I am tossing up this idea of the park.

Just wanted to see what everyone thought.  Thanks for any input

You would need to find out if it is an actual double wide manufactured home or a Modular home. You do not see many double wide manufactured homes on basements. I actually own one that I just sold. Inside the home there should be a HUD manufactured home data sticker. Maybe by the breaker panel, in a closet or inside a laundry cabinet are some places. Why where you planning on moving it? Is the basement finished? If not you should be able to see the metal frame if it is a manufactured double wide also.

As for moving the best way would be a house mover and move it in one piece.  If it is an actual double wide manufactured home they could split it in half and add the axles back on it and move each half.   The cost is cheap if it can be split and moved in 2 pieces.  If moved as a house I would expect the cost to be at least 10K.

I have never bought a park but I was looking about a year ago and at that time this is what I was told.  I would imagine a lot of other knowledgeable people will chime in.

The park should have it's own value and the homes just get added in to the price of the park. The value of the actual park is from the NOI of the lot rents coming in from the rented spaces. So if it is say 50 spaces, rented at $200 each space and it is 100% occupied you would get $10K per month gross, minus out your expenses and let's say your net is $8K per month net. So then $8K x 12 month = $96k per year. Divide that by your CAP rate let's say 10%, so $96K / .10 = $960K value for the park. Then add in the value of each park owned home. I believe that is the correct way but like I said I am not too sure as that was the info I remember. Maybe @John Fedro can answer that question.

I'll just add my thoughts onto what the others have said.  I think the value of the home varies greatly based on it's location and demand in the specific area.  Prices can vary from city to city even.  Prices in ND, might be totally different that stuff in Texas for example.  It is what ever the market sets it at pretty much.  You should see what others in the area are going for.  Being it is in ND, prices might be real cheap since the oil boom died off up there.  I have heard the prices are pretty good up there on some stuff.  I am not too far away in SD.  Gillette, WY is another place where the prices are good because the demand dropped out.  Over here by me prices are crazy expensive compared to what they used to be.  I have even seen prices appreciate over 10K on some homes compared to the exact same home 10 or so years ago.  Do some checking around.  

I think there is good and bad in mobile homes.  They tend to fall apart easier especially the older ones because they are made cheaper.  I think water being the worst enemy of a mobile home.  But really I think it also is how they are taken care of as well.  A lot of places the class of tenant renting mobile homes is lower which then sometimes leads to more damage and issues but some people are great too.

Are you looking to buy and sell or buy and rent?  You can do about the same with mobile homes as houses.  Mobile homes will not go up in value usually but I have seen in a few instances they have.  If your buying cheap and fixing them up and selling then there can be money made that way for sure.  All depends on what you can buy them for.  You can buy and rent them out also.  That model works good as well.  I think for someone getting started with a lower amount of money it is a doable option.  In that case most likely the home will be located in a park and then you will have to deal with the park owner or manager.  A lot of parks are not to keen on the idea of letting people rent out their homes so you have to check around and see if that is even and option.  I would try to keep your lot rent cost lower but I think that also depends on your location.  For example rent around me vary from about $125.00-350.00.  

There is always good and bad to everything and everyone will have a different answer and opinion regarding mobile homes.  Keep in mind the days of buying and selling for a higher price on payments to someone has about disappeared with all the Dodd Frank and the Safe Act stuff.  If your not familiar with those you can search on here for all sorts of posts about it. 

Mobile homes are can work, do your research and run some numbers and see what you come up with.  Good luck and if you have any questions, bigger pockets is a great site to get answers.  There are tons are great people on here.

I wasn't planning on the sale of this place but if it happens then I would like to be able to use the money somehow. I have a LOC now for only about 50K that I use when needed. My thinking was to pay off the house and then redo the LOC for $150K so then I have access to some of the equity in my house but at the same time not paying interest on something if I am not using it.

Hey Guys, quick question.  Would paying off my mortgage be the best thing to do if I had the chance to?  I purchased a house and fixed it up.  The whole plan was to keep it as a buy and hold.  It was a joint venture with a family member also.  The family members plans changed over time and I have since paid off the family member as they wanted out.  I also sold the home to some friends of family on contact and now they are to the point of getting their own loan for the house and thus paying me off.  Wasn't really planned that way but it is not what it is.

I am trying to decide what the best thing to do now is.  With the money from the sale and a little extra I could pay off my house and then save me over $400 a month on interest.  I can then redo my line of credit to take full advantage of the equity in my house.  Or what might be everyone's thought on that situation. 

@Joe Splitrock Yeah I know what your mean.  Prices have skyrocketed.  I personally know a couple who bought their house in the low 110's less that ten years ago.  Last year it appraised in the low $130's, they just listed it in the mid $170's and it sold in 3 days.  It was nothing fancy to say the least and needed work.  Crazy how prices have jumped in the last year.  Sure it makes my house worth a lot more but doesn't help you buy another as the new one is that much more expensive. 

 Summertime hotels here are expensive for sure.  Can't afford to vacation if it cost you $150 a night.  And with all the new hotels that went up the the last few years you would think prices would come down.

Yeah Lead used to have cheap houses but now there is nothing cheap.  There must be plenty of people buying them or at least enough people renting them up there. 

@Jonathan Harms  Welcome to the community.  We don't get too many from South Dakota on here but there is some.  How is that vacation rental doing by Mt. Rushmore?  Just was curious.  I hope your area is better than it is over here.  Things are really getting high priced for what they are here in the Rapid City area.  Good luck in your future endeavors and see you around.