Help analyzing Ft Collins Colorado park

I would like advice on a very small (7 space) MHP in Ft collins CO on 1.5 acres. Homes are on a private road parallel with the main road so they all face the main road and have a ton of space.

The main appeal to me isn’t so much a high cap rate but more of a land bank deal. there are homes around the corner that sell in the mid $400s and are maybe 10 yrs old. Also, the current zoning would allow for multi family development I believe 12 or 13 units.

Here are the numbers:
GSI $28k
expenses $10k
NOI $18k

The seller is willing to seller finance with 25% down ($100k) and I think I could get the interest rate in the low $400s…that isn’t a huge ROI, but it would put COC at around 5% and about a 9% ROI with the principle paydown.
I think rents could easily increase by $50-$75/mo each year until up to market rent. Current rents are at $330/mo but I called all of the surrounding parks and they are at $475-$625/mo. The lots are huge compared to any other MHP in the area with only 7 lots on 1.5 acres. This could raise the cap rate around 1%/yr for 3-4 yrs. I think rents topped out would put this park at a 7.5%-8% cap rate.

The seller was asking at a 3 cap (Yea, the story of my life living in Utah and looking in CO). I have talked her to a 4.5% purchase cap ($400k purchase price) but the rents are super low. The sewer is district and water is on a well shared with a neighboring property. It sounds very low maintenance since many of the residents have lived there for 20 yrs and I’m pretty sure the seller has owned it since new in the 90s. Street view shows that it’s very clean, definitely not your typical MHP. There is a small side street that comes off of the main road and curb, gutter, landscaping, and asphalt all appear to have been very well maintained.

If it’s down the street from you then seems like it could be an okay way to get into MHP’s or diversify your real estate holdings. If you’re out of state or a few hours away it won’t be worth all the work for 18K.

I never like buying anything at a 4 cap and hoping I can get it to an 8 after rent increases. A 20% rent increase is pretty substantial and you might need to spread that out over time to keep the noise reasonable.

1 Like

That’s probably a local real estate investor type property and likely won’t move the needle much for the specialty MHP RE investor. It may be a good deal, but measure it in terms of local RE dynamics and ROI.

I appreciate the input. My original offer was $40k below what she will currently take so I haven’t been super excited about paying $400k. I agree that it probably won’t be worth the time to manage being that far away.

That makes sense that it’s a deal for the local market. I was envisioning to market it to developers with the possibility for redevelopment for 12-13 townhomes. I did a similar deal in salt lake city last year and I had developers bidding it up to buy it. It ended up being a sweet deal. It’s just hard to know what developers will pay/door for something like this.