A park in this town is for sale, not sure what to think of the market. This is a small town in MN of about 3,000 people, located about 15 minutes from a town of 60,000 and an hour from the Twin Cities.
2 bedroom apartments in town are about $625-$675. Lot rents here are $350, parks pay water, sewer and trash. Occupancy and housing demand is good. There are 2 MHP’s in town, one park is 18 lots the other about 30. City services at each park. only a few POH at each park, so mostly tenant owned homes.
I think due to occupancy and housing demand, it must be a good market, however due to the size of the city and distance from larger cities, maybe it is not so good. Also, what kind of CAP rate would be expected considering the small park size and in this kind of market? Thoughts?
In my opinion it seems worth digging into a bit. The size of the town doesn’t alarm me if other things check out… I’d check the rental home vacancy rate, call the chamber of commerce and realtors to get an understanding of the economy and who the major employers are in the area… find out what new businesses are coming to the area and which (if any) are leaving and why. Ask the realtors and chamber what they know about the park and its owner. Some of those small MN towns are close to resort towns and work can be seasonal for the people living there… this would be a concern.
I’d run a test ad to test demand - go for at least a 10cap.
I’d probably want at least a 12 on something this small. I think the buyer universe for sub 20 lot parks falls off dramatically making it much more illiquid.
The areas within an hour south or east of the Twin Cities tend to have more employment basis and higher lot rents than the areas north and west of the Cities. Overall, most areas of Minnesota are doing well economically.