What do you guys think of this MH park deal? - Posted by Kent TN

Posted by The55+GuyFromAZ on January 28, 2004 at 22:55:23:

…about 2 years ago.

So what did you do today… besides be a general nuisance that is?

What do you guys think of this MH park deal? - Posted by Kent TN

Posted by Kent TN on January 28, 2004 at 10:19:19:

I called about a small and new 15 space park for sale. The are currently 10 vacant lots. The park is 2 acres and some of the lots are large enough for double wides. There are 3 park owned homes (1 DW and 2 SW) producing $950 per month income. There are 2 single wides renting lots at $125 each. Total gross is $1200. Asking price is $175,000 but very negotiable, especially with cash which my partner has. The upside seems excellent. I would purchase 5-7 year old repos and place them in the park then owner finance Lonnie style. I feel in can fill it up by the end of this year. I have done 5 Lonnie deals, have 2 MH notes in my IRA. I own rentals and do foreclosure rehabs. I feel I’m ready for this and am excited about the challenge. What do some of you think about this deal from the limited info here?

Too Late. Deal tied up by someone else. - Posted by Kent TN

Posted by Kent TN on January 29, 2004 at 08:24:13:

I was too slow and someone tied this deal up before I could get a deposit down. I felt really sick, like being kicked in the stomach for about 5 minutes. Hey, there’s more deals out there. I learned alot from this one. I told many people you can’t steal in slow motion, but have never had to say it into the mirror. Thanks for the good responses.

I think it makes a lot of sense… - Posted by Greg Meade

Posted by Greg Meade on January 28, 2004 at 20:04:58:

to offer 150k with 50k down and balance at 9% ammoed in 20 with a 5 year call. The reason(s) for this are manifold, but mainly this leaves you 100k to fulfil your plan to add 10 homea and recoup ala lonnie or even rent(450 x10 X 12 month)for 54k per year. This expansion will pay for itself in 2 years and will add 1/2 M in added value with a 10 CAP. You shouldn’t try to steal in slo mo…tie it up and do good d.d!
congrats, you are gonna be a MHP owner!

Re: What do you guys think of this MH park deal? - Posted by Charles K Clarkson (TX)

Posted by Charles K Clarkson (TX) on January 28, 2004 at 18:55:29:

You have two businesses here. One is a mobile home park and the other is a SFH rental business. The mobile home park has 5 lots in it generating $625 per month. (Assuming DW and SW rates are the same.) The rental business is grossing $575 per month.

The typical expenses for a MHP is 35%. So your NOI is $4875 per year. At a CAP of .12 that’s a value of $40,625.00 ( = 625 * 12 * 0.65 / .12 ).

IMO the operating expense for mobile home rentals is about 50%. But let’s be optimistic and say 40%. So the NOI is $4,140 per year. At a CAP of .12 that’s a value of $34,500.00 ( = 575 * 12 * 0.60 / .12 ). Assuming the homes are worth that much.

In it’s current condition, the park’s income is worth $75,125.00 in a .12 CAP market if there is no deferred park maintenance and the above assumptions are true. The biggest questions are how much do you value those ten vacant lots and why are they vacant in the first place?

HTH,

Charles

Re: What do you guys think of this MH park deal? - Posted by Brian,WI

Posted by Brian,WI on January 28, 2004 at 18:31:54:

Kent,

Is this park by you in Tennessee?

I’m looking at almost the exact same thing in Wisconsin, except this park isn’t that new.

WOW!

Brian,WI

Sounds like a no-brainer to me… (nt) - Posted by The55+GuyFromAZ

Posted by The55+GuyFromAZ on January 28, 2004 at 10:53:19:

.

actually, did one like this in texas… - Posted by Greg Meade

Posted by Greg Meade on January 29, 2004 at 06:29:52:

prior to selling a park there. Brought in 2-3 year repos, paid about 8k setup each. spent approx 2 k each in apps, a/c repair,carpet,etc. Rented all 6 out and only had two months vacancy(900) total on these units in three years. had to replace one Fridge(150) and service on all a/c (290 per year).I spent my repair dollars where they did the most good…up front when unit was empty. sold park after the third year and it is still cranking out a good return. The panacea for Kent is after two (three) years he can sell each unit for probably 12-15 with attractive terms with L.D.s.
A better rebuttal would be park owned homes are not worth the same CAP as dirt rental…but we can save that for another day!LOL
regards,
Greg

Re: I think it makes a lot of sense… - Posted by Charles K Clarkson (TX)

Posted by Charles K Clarkson (TX) on January 28, 2004 at 22:18:39:

1/2M sounds a bit optimistic.

450 * 10 * 12 = 54,000 gross

For a value of 500,000 at a 10 CAP you would have to get by on 4,000 for repairs and vacancies. I don’t think that is realistic.

( 54,000 - 4,000 ) / 0.10 = 500,000

Assuming 10% vacancies (5400) and 40% expenses(19440):

( 54,000 - 5400 - 19440 ) / 0.10 = $291,600

Which is still a good gain.

Does this mean even you could do it? (nt) - Posted by Dr. Craig Whisler

Posted by Dr. Craig Whisler on January 28, 2004 at 19:30:19:

.