All Forum Posts by: Will Stewart

Local banks and credit unions

I’d consider whether that’s a good market to invest in if POHs are only renting for $600 a month. It’s hard to make money on that long term. If they’re really well maintained and you could sell them for $20 or $30k each and charge $400/mo lot rent with water billed back, could be a nice little starter park. 

We own a few parks in small towns that aren’t close to a large population center. I really look at income and home prices — one of our small towns is pop 881 but has a median income of $52k and average home price of $350k. Just make sure there’s a strong local economy and the population is general stable over the last 10 years (ie the sole employer didn’t just shut its doors)

In our parks in “hot” markets (northeast, $400k+ home prices, $2k 2br rent) we run <1%. In the one slower market we’re in (recently purchased, rural northeast, $250k+ home prices, $1.2k 2br rent) we expect to run more like 3-5% once we’re stabilized. Started as 25% and we’re down to 10% after lots of work and legal fees over 4 months. 

Yes, there are a few park owners in my area (northeast) that do this. They’ll have their realtor post a facsimile (or pics of the same model from the dealer/manufacturer) as new construction. Seems to work well. 

Post more details if you have them and you’ll get a better idea of whether it’s a good deal. Price, Lot rent, private/public utilities, Town/metro population

We own several parks on well and septic. Get them inspected and make sure to include potential capex in your underwriting. It makes for more issues but never keeps us from buying a deal if the price is right. 

Hi John

It’s definitely doable. Just make sure you understand if there are tax liens and if so, how those get cleared (aka make sure attorney reviews everything). Situations like these can get you a property others might run away from. Let me know if you want to bounce any ideas off me 

Where are you marketing? Worst case if you find a great deal you can always earn an assignment fee. 

Find what you expect the terminal value to be and back into a price from there. Back of the envelope example:
50lots x $400 lot rent x 12 with 40% expense ratio at a 10 CAP = $1.44 mil. Say you have $500k in capital improvements to get there, then go ahead and offer a bit under a million for it. This at least gets you in the ballpark.
Financing is another issue if there’s no cash flow day 1.