1st Mobile Home Park Purchase in Antelope Valley, California

Hi everyone, I am looking to purchase my first mobile home park and I would love to hear your opinions on its value. It is 32 total spaces with with 8 of the plats vacant. All of the homes are owned by tenants. Each lot pays $450 a month space rent with gas/electric billed directly to the tenant.
The park is on well and septic (seepage pits) and the asphalt needs to be repaved immediately. I know there is demand in the community for homes and I believe I could fill the park up in a matter of 2 years, so I am keen on the upside. However I am terrified by the private utility situation.
In addition to the value of this park, I am curious what type of backup plan I should have if either the well or the septic system fails, and how much time/money it will cost.
Your comments are greatly appreciated. Let me know if anyone needs more info!

Eli :slight_smile:

Go find local well and septic operators to give you an opinion on the status of each. They should be able to also provide an estimate for replacement cost if they stop working. Additionally, they can provide quotes on the cost of operator these each year, and can probably do it for you.
I would also ask the question of can you tap into local city water and city sewer. That way, if they do break, you also have that option.

In terms of value: 450 times 24 lots times 12 months = 129,600 of revenue.
Expenses: I am using a rough estimate of 50% as it’s a small park. It could very well be less but you should verify with historical expenses and your proforma expenses on how you will operate the park.
Expenses = 64,800
NOI: 129,600-64,800=64,800

Value at a 10 cap is 640,800.
Value at an 8.5 cap is approximately $762,000.

Don’t forget to subtract the immediate deferred maintenance from your purchase price.

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Hello, being new at this I don’t know much about septic systems but I will add my experience to aid in your decision making.
I have an 11 home MHC, using septic systems. (They have city water & no plans for bringing sewer to the location). One of my tenants had a tub that would not drain. Turns out there was a 9 to 12 inch long clog of grease in the 3” diameter pipe that flows to the septic tank. Meanwhile this tank was leaking smelly water all during a very wet fall so septic folks had to wait till dry weather to see if they thought it was failing but they said it was possibly a failed drainage field. (probably because grease flowing into the drain fields.) County inspector said sometimes leaving it unused for a time can help the system heal. He described what I would need to do if it fails according to the current rules:

  1. If it needs repair, it would not be “grandfathered” to allow 2 homes onto one septic tank system. (The new rule is one tank per home)
  2. Thus I’d have to add another septic tank for the 2nd house
  3. And I’d have to add TWO drain fields WITHOUT reusing the land that holds the current drain field. He said normally the soil absorption would be too damaged to reuse. He said sometimes (with the right tests) I may be able to use the same space if I were at a different level of the soil (ie. more cost to dig deeper).
  4. Well this place was designed 40 years ago so the spacing makes it very likely I can not add another drain field EVEN if the soil tests states I can at least reuse the current drain field area at a different depth for one of the homes.
  5. There is one small portion of the property without homes – he described that an option would be to use that for the new drain fields and I’d have to install a pumping station to get the stuff over to that area.
  6. Well all this stuff is too much $ even if there IS room to add two whole drain fields.

I did not renew the lease of the “grease tenant”, took months for my repair guy to fix the house (nothing to do about the septic system, just the house had to be all repaired) so the septic system was at least having less usage since only 1 house was active on it for a few months. New tenant is just 1 person and his job makes him absent a few days a week. I am hoping this will let the drainage field continue to work. But talking to the public works county inspector to ask “what if” could be enlightening – he should know if there’s been any issues big enough to be cited and fixed through their system.

You might also call some local septic service companies to see who has serviced this property before and if the owner took care of the system (or perhaps the seller knows the companies over the years). I came across one company that said the slum lord owner never called them out for maintenance, just waited till there was a backup and then called the service. He said he was their regular service provider for some time but finally refused because the guy would not properly care for the system by doing regular maintenance. He said if he did, these systems would last quite a while but knowing how the owner was he felt that the 30+ years they’ve been in existence could mean they are at their end. Ugh.

Another person who uses septic systems said they like them better than paying for sewer costs because if you take care of them they can last a long time. (But of course with tenants that is unpredictable about taking care of them.)
Good luck with your decision.

Eli,
Reach out to me. I have several MHP in CA that are well and septic.

My concern on this park is the Rent Control. I think Antelope Valley is in Unincorporated LA County?

Without knowing the address of the park I can’t say for sure if you will be subject to rent control.

Does the park have a MUP? Or is it legal Non Conforming?

https://sdwis.waterboards.ca.gov/PDWW/index.jsp

Do a search for you small community water system to check for water quality issues.

CA is getting crazy with their regulations on wells. The State has stepped in and is enforcing the water code to the letter of the law. A new well will cost you $50-100K. If you have any constituents that violate the MCL you will then be required to install treatment, even for Secondary Standards.

For Septic systems, you are looking at 10-15K per leach pit if it one fails. A 30 space park should have one or two systems maybe more so plan on keeping about $20k at the ready. Also the state water resource control board is getting very strict. They are in the process of re-enrolling all the discharge permits to the new general order. Which requires Quarterly inspections and a ton more reporting. They also want to be notified of ANY spills. They used to only want to hear about spills of 100 gallons or more. We have 2 parks on the new general order and my O&M has increased dramatically.

These issue all are very important especially if you have rent controlled park and the Sewer and water charges are included in the rent.

PM me if you want to chat.

Anthony