buying mhp. 32 units with 16 more available lots. Additionally, has a sfr, 3 family and 6 family on 29 acres.
rent roll 205,000…expenses 68,000. 135,000 from mobile homes and 70,000 from rentals. Buying for 1,250,000
cap rate seems great to me. I currently own 26 residential rental units and can’t find cap rates like this.
any pointers for a first time home buyer on what to look for.
Also regarding the 16 remaining available lots…owner is original. Built lot himself. Selling about one additional unit per year. Anything to look for with these vacants. Says all approvals are ready for additional lots. In middle of doing my due diligence but in contracts.
32 pads rent for around 375 apiece total 135k a year. 16 more spots approved and on survey just need to install foundations.
70k annual for the 10 rentals
Dino, Take out the value of the rentals before you evaluate how the park is performing. You have a good deal of revenue derived from multifamily rentals so you’ll want to evaluate each business separately. We typically quick value small multifamily at about $30k-$35k a door if it’s in decent shape and rented. So, your purchase on the park is more like $900k-$950k. Just some quick math on that and you’re probably buying that component at closer to a 9. It’s a little rich for our blood, but you know the deal and upside a lot more than any of us do.
The reported expenses seem very low. When you run out your ProForma on this remember to factor in some additional costs that probably aren’t being accounted for. Deferred maintenance will be large considering your apartment component so factor it in very generously. Your economies of scale are low on the multifamily so it may be difficult to find competent management (Factor in some money for the extra time you’ll be dealing with this).
On your 16 extra lots, I’m having a little trouble understanding what you are asking. Is this 16 lots that are ready to go? Or is this 16 lots that are approved to be built? Or is it something in between? Any way you cut it, they are worthless when you are buying. If you have to mow it, it’s worth less than worthless.
Charles
Appreciate the feedback.
Taxes are 31k. I’m pricing out insurance right now. Tenants pay all utilities.
Old timer that owns and operates. Built park in early 80’s. Seems to be good guy.
Has only 43k in expenses. I’ve added another 25k for my #'s above his. The 10 rentals consist of a single family, 3 family and 6 Fam. Not great shape.
The other 16 lots need foundations pads but aside from that engineered and approved. Just mowing right now.
Realtor said doing 2-3 build and sell is reasonable for demand in area per year. With the pad and purchase for 3br manufactured home for approximately 36-37k cost. Selling for 49k. 10-12k profit per. X the 16 pads. Over next 5-8 yrs. worse case 10yrs. additional lots will rent for 375/month. If do 2 a yr. can increase monthly revenue by 750 per year. 5 yrs was hoping to have an additional $4k a month ($48k/yr)