1st Timer Seeking (Purchase Terms) Advice


First-time posting/potential park owner. Retiree offering me a 22 unit park for $275k w/ $50k down on a 5yr balloon (amortized 20yrs). He came up w/ that number w/ assistance of commercial broker(s). Only 6 (older) park owned units in place. 16 vacant pads. 1 site-built home (fair condition at $550/mo - maybe $25k value). All pads have city water/sewer (one master meter equally divided & distributed to tenants for monthly payment).

Unless my numbers are off, I feel it may be worth perhaps $500k(ish) at capacity. $250/pad seems very realistic for lot rent and I think could ultimately draw $300/pad. Unfortunately, 75% of the park is in 100yr floodplain. Noone I’ve spoken to in the community or county office has ever seen that area flood, but never the less. Elevation certificates are in place for each pad. Existing units are 1’ above flood elevation and future units would all be installed so their living space is 1’ above as well. I would likely self- manage. Flood insurance, taxes, and maintenance approximately $8k/yr. Test ad yielded 30-40 hits in less than 1 week. Entertaining CASH program to fill empty spaces. I feel like it may only be worth $150k or so as-is if a 6 unit park, but I’m not certain how to value the potential for the add’l 16 vacant spaces.

Thanks for any insight. Hopefully I can reciprocate someday once I have some experience under my belt.


Here are my back of an envelope calculations using just your “very realistic” rents:

Rent $250 x 22 lots x 12 months = $66,000 gross income x .6 (assuming 40% expense ratio) = $39,600 NOI / 10% cap rate = $396,000 market value.

$396k - $275K = $235,000 gain.

That is a nice piece of change, but you will need to move in and sell 16 homes which might take a pretty long time and something like a $240,000 capital outlay. I guess with a park that small, all your profits are in the last few homes. That is to say the homes you have in there now will just be covering the fixed (and nearly fixed) expenses. So you will need some deep pockets to pull it off and not get in a tight place when the loan balloons.

Others can tell you better then me, if you would be better off waiting to sell after all the notes on the homes you sell have paid off (and you have your $240k back) or if you could go ahead and sell without having to discount the notes too much.

Also, I would guess that when it is your time to be the seller, you will have to play the bank just like the current owner is. Hopefully some other forum members will school me on selling a small park like this and tell us from their experience that, yes indeed, banks will be happy to loan on a full 22 lot park. That would be great.

How do I see it, going off half cocked; Don’t consider it if you don’t have $300k kicking around that you don’t mind tiring up for a number of years. And if you do have that kind of spare change, why not look at a bigger and better deal?


When buying a park in my younger years the seller said in was in a flood plain BUT no damage ever to MH.
3 years later 40 of 50 homes had water in them, at that point we asked the county to buy it for a park, they refused. The only way we could sell the (never flood park) was to sell an exceptional keeper park in remove the problem park. At that point the county stepped in and made life miserable by forcing all present and future homes to be 4 feet above the ground. Last year it flooding again and the county condemned it’s future use as a MHP. Tell me what your income is when it is EMPTY??? Personally from the anguish and heart breaking reality from residents losing their life’s belonging and I was part of it–WE


will never own a park in a FLOOD PLAIN`!! The time we spent could have much better spent in building a nice park plus when the lot is vacant their is NO income.


Agree with Carl here. Past performance is not an indicator of future performance… Just because it has never flooded doesn’t mean that the chances are any lower that it won’t flood tomorrow. In addition, when it does flood, you’re going to start seeing the city/county do things like Carl just mentioned.

In addition, this is going to be a lot of work and a lot of money tied up and at the end of it, you’ll have a 22 space park in a 100 year floodplain. If I were you, I’d drop that one and keep looking. The exit at full capacity isn’t appealing at all and your poole of future buyers is very, very small.


Thank you for your replies. As much as I’d like to overlook the floodplain risk, my gut too tells me otherwise. I was of the impression that if I properly constructed the county required engineered foundations (for floodplains) in addition to constructing their interiors/mechanicals above flood elevations levels, having applicable insurance, etc, that I would be ok even if flooding was to occur. I wasn’t overly concerned with resale as I plan this to be a long-term buy and hold, but I would ultimately like to obtain some kind of “conventional” re-fi after the 5 year seller finance term expires and I suspect that would be extremely difficult due to the small size of the park and the fact that it is in a floodplain. I’ll likely pursue other options. Thanks again for your insight.


I’m also new to the mobile home business, but by trade I am an engineer that studies storm water and floodplains. Talk to the owner about performing a professional survey and submitting a LOMA (Letter of Map Amendment) to FEMA. This will allow you to prove your property is not in the floodplain and could get you out of paying flood insurance on the property. Doing something like this for a small parcel like a mobile home park would cost around $5000, but would save money on insurance in the long run if it is proven that you are not in the flood plain.


@kozzybear glad you responded here.

For getting a LOMA in this scenario is a hydraulic study ever required? Or is it as simple as getting a topographic survey showing that the improvements are X feet and Y inches above the base flood elevation?


@jhutson A hydraulic study will be required. However, I live in Michigan and the one LOMA I filled out was rather extensive. In my county in Michigan, we have a good relationship with the County Drain Office and were allowed to use a study done by the County for the drain in question. For this project specifically, all we needed to do was a topo to prove that the parcel was above the floodplain elevation.

Unfortunately, if your local drain office does not have any info on the stream, you will need to perform one yourself. Nowadays its more common for studies to have been done than not (at least in Michigan and Ohio).

Also, the federal government takes FOREVER to respond. After you submit your LOMA you basically sit and wait. I have heard responses taking longer than 180 days.