Posted by James CA on April 29, 2005 at 13:22:06:
Daniel,
How long have you owned the park, and how did you find this deal?
What are some real challenges of managing MHP for a new investor from your experience?
I guess a small park will be a good place to start.
Are small parks worth it? - Posted by KevinJ
Posted by KevinJ on April 26, 2005 at 08:04:14:
I have a chance to buy a 1 acre, 9 pad park. 6 pads are filled, tenant owned homes. 125/month rent. Park owner currently pays water at 285/month and prop taxes 185/month. Asking 95,000. He’s an out of state seller- may offer terms. I don’t see how this can cash flow at that kind of price. I would look at seperate meters for the water, Lonnie deals on the last 3 pads and an annual lot increase of 10.00. My goals are modest and would really like to get into the business. There is no manager on site- is one needed for such a small park? Any thoughts would be appreciated.
Re: Are small parks worth it? - Posted by Lyal
Posted by Lyal on April 27, 2005 at 06:14:24:
Kevin,
What do other parks in your area charge for lot rent? If it’s quite a bit more, I’d raise the rents to market in several steps. Forget about 10 bucks a month / yr. That’s just so you won’t get yelled at. May as well get used to it. They’ll yell anyway. Be fair to yourself.
The separate metering is good but it costs money to set up. Is there any other upside potential? Storage units, coin-op laundry, Camper or RV parking?
What about deferred maintenance? Will you need to dump money into this right away?
Whether or not on site management is required will depend on your state and local governments. Check with them.
You may have something here but you need to do more homework.
All the best, Lyal
Re: Are small parks worth it? - Posted by Chris Reuman (Maine)
Posted by Chris Reuman (Maine) on April 26, 2005 at 21:42:31:
Kevin,
In your area what will a 2-3br, 1 bath, older mobile home rent for? What will it cost to buy one and move it into this park, set-up, etc.?
I ask these questions, because if the rental income is high $450-$600, you can turn this small park into a high cashflowing 9 unit complex.
I know most people view parks and lonnie deals as a way to get away from landlording, and you can. But as Tony/Scott say, before you become a burned out landlord first become a landlord. I find that the people that are burned out landlords, are so because they did everything: maintenance, filling vacancies, property managing, etc… People always say, “I don’t want to fix tiolets.” I don’t either, that is why I have a handyman that I pay $12.50 to $15 an hour to fix it.
Just some thoughts.
Best investing, Chris
Re: Are small parks worth it? - Posted by Daniel (SC)
Posted by Daniel (SC) on April 26, 2005 at 20:02:38:
Kevin,
With your numbers, looks like you will have $810 a month income with $470.00 a month expenses, not counting maintenance, income taxes, insurance, etc. That really does not leave much for mortgage payments (not counting if someone defaults). The good thing is with just lot rentals, it will usually run itself. I always look at it from the standpoint of if it makes its own way (payments)without any expansions, then its worth it. Then the other 3 open lots are just cake. I really see no need for an on-site manager for a park that size. I ran a 16 lot park with 12 being lot rental and 4 homes, and had no manager. I currently own a 32 lot park, 17 lots, 9 homes, 6 open lots, and have no on-site manager (don’t know how you could afford one in a small park). Just make sure you have a sign with contact information.
I guess to sum it up, if it pays for itself as-is, go for it. If not, negotiate with the owner and let them know theres no way the numbers will work.
good luck!!