All Forum Posts by: Roger D Jones

I don't think @Don Konipol was being sarcastic he just answered your post with basically the only answer there is.  Outside of City services you will need to punch a well and depending on the size of the community maybe two.  For sewage you will need septic tanks and drainfields.  It will have to be professionally designed.  I have heard some systems have individual tanks with shared drainfields but again it would need to be professionally designed.  I suppose you could save some money that way but at this point it is going to be so expensive it won't even matter anymore as you will be punch drunk with the invoices piled up on your desk.

Push the seller for seller financing.  Park is too small to attract any private equity interest so seller is in a bit of a jackpot trying to sell something so small and so unique.  Trying to sell something that no one can get funding for is more his problem than yours.  240k can leverage a lot of bigger parks and investments in general.  

Also as a side note I would seriously question a 12 cap on an all POH park.  I would recommend you get way into the weeds on your due dilligence- septics, roofs, subfloors, hot water tanks, drainfields, etc.  What is the status of that well?  At 25 years all those roofs are coming due to be replaced.  Was the owner doing his own repairs and hiding the costs?  

Sorry to be a Debbie Downer but if you are new to this you don't want any surprises.  

With that kind of real estate in your pocket you are certainly wildly successful and a very savvy and intelligent person.  I have followed Frank Rolfe and his Mobile Home University for over 20 years.  This is his take on developing mobile home parks.  Just some food for thought.
https://www.mobilehomeuniversity.com/mhp-mastery/the-new-par...

Andrew- I think there is a business opportunity here for you.  First off there are complanies that do what you want to do currently- buying older homes, fixing up and then reselling.   Usually these homes are on private land and "need to be moved" but the end buyer has to arrange for moving the home.  

As a park owner my number one concern is keeping my parks full.  Empty spaces are a scurge... waiting indefinately for someone to bring in a home and put it on your lot.  There are manufacturers that offer programs where we can buy new homes from them on contract to then sell on our lots but that is expensive and the paperwork is overwhelming.  

I think a company that would arrange to put a used, older, reasonably remodeled home on to a vacant lot on my park to sell in place would be very successful- particularly for us 'mom and pop' operators.  

How that type of business venture would pencil out I am unsure and I think @Rachel H. would be more in tune with those numbers.  And certainly park owners could and should share in some of the costs in this type of venture.  Parks die when vacancies are not addressed and worse yet allowed to expand.

I love it!! No Trespassing, Private Property, Video Camaras in use...
Oh yeah... Welcome to Chapparral.  

All joking aside I spent two years on our local city's sign committee.  We revamped all the sign requirements for the entire business district and surrounding industrial areas.  We started with a couple months of research which pretty much boiled down to three things-

1- You don't need a sign if everyone who needs to know where you are knows where you are.

2- Most people driving by don't see them.  Size matters... you have to have a pretty huge sign for people to notice. 

3- Ego drives most signage designs, Ie realtors, financial planners and attorneys.  Sorry guys... but it is really the truth.  The 30k custom granite backlit monument sign on etched italian marble announcing 'The [your name here] Group' is a great photo op for your Facebook page but it mostly it is just an irritant to your landscaping contractor.  

Bottom line is in my humble opinion is to just keep it simple.  I made my own... and had a great time doing it.  Fun and exciting stuff.

Hope all is going well...
Rog

 Steven-

What I gave you was as rough an estimate on a couple ball park figures as you can get. Total CAP rate on the POH income is one way, CAP on the pad return is another and then of course just buying the trailers and rolling on from there. There are dozens of due diligences that have to be looked at on getting to a real starting number. You know this but how you negotiate the deal is listening to your seller and seeing where you can take the price. How are utilities delivered and who pays for what? What is the condition of the home and trailers? Do they look good but need new roofs, have soft subfloors and ancient water heaters?

One of the things to remember in owning mobile home parks is you are not only building a business to draw profits from on a monthly basis but you are also building a business that you can sell for a profit down the road.  That house makes it a little more difficult to sell down the road.  Another reason to try to negotiate low with the seller.

I would try with the financial institution that is carrying your current note first.  Going elsewhere may prove tricky as you are 1/3 owner.   That may cause some hesitation.  If you are looking for funds to make infrastructure improvements you could try the SBA and/or do some research for any State financial assistance.  May have some luck there... 

This is why MHPs with homes attached are so difficult to market. 
First thing you need to do is separate the two entities- the house and the park.

The house- Get the appraised value of the home which should be easy enough to do.  Then because it is next to and attached to a MHP deduct 15% +/- off the value of the home's appraised value.  15% may be too conservative as I have heard some say 25% or more.

The Park- Two ways to play this. CAP rate or wholesale value. With CAP rate take the annual rental income (of all 5 homes) annualized with the home #1 at estimated $1000 per month gets you $64500 per year gross income. Pull 40% off for estimated expenses leaves you at $38736 for an NOI and with a 8% CAP rate your at $484200 for a value of the MHP. Most large PE MHP investors will tell you to only offer on the pad rental portion of the income which assuming $500 each, 25% expenses and an 8% CAP your at $281250.

The other way is to offer her the wholesale value of the five mobile homes.  You may be able to get NADA valuations on them or just do craiglist research.  Remember though your not paying retail price... buying all five at one price should be more of a wholesale price.

Left the maintenance person with free rent out of the calculations... that is for you to decide after you buy the park.  I am assuming you would be paying for materials and replacement appliances, etc... so $1000 per month for labor to take care of 5 mobile homes should be seriously looked at down the road.

Flag poles, playgrounds, cabanas, paved streets, street lamps, RV parking, large entrance signs, swimming pools, etc- all good stuff. But it has to pencil out to the bottom line. Park improvements require a very keen understanding of 'will this expense drive my NOI? I have nice parks.. clean, organized and well maintained... and my wife almost threw me down the stairs when I wanted to spend 5k on a flag pole. She told me to run the business; not my ego. Gulp...

 As Scott says... context is everything.  Just be the best 'you' you can be and realize it is more important to know what you don't know than to try to show everyone what you do know.