I’ve been evaluating parks for about 6 months and either find them overpriced or too much work. The latest is too much work. I spoke to the seller and he said I shouldn’t buy it, since I’ve never had a park before.
Its in Morganton NC, 24 lots with metered city water, sewer and electric. 8 acres only 2 park owned homes. Lot rents $200. Asking price is $170k with seller financing.
The problem is the park only has 3 homes.
Seems like if I had a good source of homes and someone local to manage, its be quite an opportunity.
Anyone have resources in the area and want to partner with a newb?
1 - What’s your definition of overpriced for stabilized park? What cap rate do you demand and what COC do you personally demand with, say 75% LTV and 10 year fixed financing?
2 - Given your definition in #1 are you finding parks overpriced based on asking prices or based on the counters you have received from a decent sample size of parks you have actually made hard offers on with accompanying proof of funds? Where are you finding these overpriced parks - just online listings you browse? Or are you also finding broker pocket listings of off market deals to be overpriced for your taste? If so, overpriced by how much?
3 - Have you also done comprehensive local market research on the deals you’ve considered to determine where you could reasonably reset rents to on closing, and over time - and then constructed an actual 5 or 10 year IRR based on conservative estimates of cash flow and an exit price for a hypothetical sale 10 years from now?
Ive been looking on Craigslist, Loopnet and Mobilehomeparkstore.com. Many I see, in a price range I can purchase, are advertised around an 8 cap, but after looking deeper, they are closer to a 5.
I also just put together a list of parks in my area to begin sending direct mail.
In the past few weeks, Ive been connecting with brokers that don’t have them listed on these sites. Just starting to get the communication going and hoping that yields something. This is probably where I need to focus my energy
So Im looking for something $500k or less. I live in the Raleigh NC area and have evaluated parks in MI, OH, SC, NC, VA, WV, TN, GA, IN. As the park gets further away, I feel an increase in risk. Further away makes it more difficult to get out there if needed. At this price range, it’s a smaller park with less margin for error. Just my feeling, it probably doesn’t change a thing, just my comfort level. So if a park was father away, for my piece of mind, Id need a more stabilized park, with a better market, etc. Less perceived risk.
I bought a half empty park 8 years ago and filled it with used trailers I got from a park on the other side of the state that was closing. Got lucky…
Few years ago I stumbled on an empty park just as the one you described. Not wanting to test my luck two times in a row I passed on it but my dad bought it and turned it into long term RV park and is just making a killing. Actually gets more money per space for RVs than permanent mobile homes. The RV community loves it as they have much larger spaces which drives the demand. They aren’t stacked up like cordwood. He did have to invest in flipping the utilities to RV service and he also invested in sprucing up the lots with nicer grass and gravel- but it was a grand slam.
I cut my teeth watching him with his MHPs and he coached me on mine. Old man is pretty smart…
If you are looking on Craigslist, Loopnet and Mobilehomeparkstore.com for parks, that’s your problem.
These places are sometimes called the graveyard of deals.
Your direct mail should generate much better leads.
I got a 10% response rate on my last mailings and bought one park out of the mailing.
@mobilehomepark how much data cleansing and referencing do you have to do? In some counties around me the year of the mobile home is not included in the personal property tax records, so it’s impossible to know if the home is 5 years old or 50 years old unless I manually look up the label with our state’s database. In other cases neither year or label is listed. Makes compiling those lists a chore…but I guess if you’re looking for multiple homes that’s the pain to get a good deal on a good home.
Jhutson,
I think you misunderstood my post. The post was about parks, not homes. I would not sent mail to mobile home owners in nearby parks.
Although since we are on the subject. I have thought about going to the courthouses in my area and asking if I can get a list of mobile homes on private property. Then snail mail all the owners telling them if they ever want their moved home off their property to call me.
Homes are getting harder to find every year. I pay cash for the used homes I use to fill empty lots. Been doing it that way for 14 years. Most of my home purchases are either word of mouth or Craigslist. I’ve got about 100 lots and usually have to fill about 2 lots a year to keep the parks full. Most of the empty lots are from trashing older homes, and rarely will I have a home move out.