21 Unit Mobile Home Park Purchase NEED ADVICE - Posted by Ruben (KCMO)
Posted by Ruben (KCMO) on September 20, 2005 at 19:22:37:
First I want to thank Tony, Scott and Sandra on the Mobile Home Bood Camp. My only complaint was that it had to end. Now on to the deal. While I was at the boot camp my wife saw an add in the local paper for a 21 Unit Mobile Home park for sale. I called and the owner is selling due to health reasons.
The annual rent is 48,600 with the effective Gross Income of 43,740. Those numbers are with 14 park owned homes (10 filled, 3 vacent and 1 used as an office), 4 lots with homes owned by tenants so they only generate lot rents and 3 vacent lots (Only 2 usable 1 has trees that block its use). All income based on numbers provided by owner via phone only. Waiting for fax info on the rent roll.
The total expenses (Yes Tony and Scott including paying myself first) is 28,505 which leaves a NOI of 15,235 or 1270.00 a month for debt service. My numbers come to Max purchase price of 172,000.00 @ 8% interest 30 year amortization.
The asking price is 199,950.00. With the A,B,C offer approach I was thinking of 170,000.00 for all owner carry. 150,000.00 for 75,000.00 down (first mortgage via a bank) and 75,000.00 Owner carry 2nd (10% interest only with a 10 year ballon). Last offer all cash at 120,000.00.
Seller bought the property with a 70,000.00 note in 2003.
The issues with the property is that it is in a flood zone (right on the edge) which last flooded in 1986 (info from the city code enforcement and zoning office). Also this is a smaller town with only 6K in population and has been steady there for the last 7 years. 4 major companies in the area Halldeck (brake parts) Gate Rubber (vehicle hoses), Russell Stover (Candy) and Traymec (mechanical parts for vehicles). That along with a lot of service jobs like McDonald and a Wallmart a few miles out of town.
The current owner really did a good job cleaning up the park according to the code enforcement department. All homes older like Tony and Scotts parks that we saw. Looked at one of the rehabbs that is waiting for a tenant and it was good.
My biggest worry is the town. It is the county seat but I am worried about the jobs. Anyone out there own a park in an area like this. Nearest major town is 70 miles away with a bunch of smaller towns around it. Also am I off on a 30 year amortization on a Mobile Home Park. I have the cash for at least 20% down on highest price of 170,000.00
Please give me what you think of the deal