Market Research KS - Nice Empty Parks

[TCAO]

I am looking around the Wichita KS area and noticed that there are many large parks that have lots of vacant lots. Is this a red flag with respect to purchasing a park in that metro area?

[jhutson]

Not necessarily. I have seen a lot of those too and many are very mismanaged trailer parks.

If you follow the usual steps in the MHU Due Diligence Manual you can find out the answer. Look up the data on bestplaces.net to vet the market and rental demand. Use a test ad to confirm the going rent rate and demand for the area. Look at comparable parks - are all of them really half full or just some of them? If you do these things you can find out if a park is mismanaged or if the area has problems.

I came close to purchasing a Park outside Kansas City and it had great demand, but it was a very big turnaround Park and the capital expenses it immediately needed could not be absorbed at the negotiated price. There was also a very limited contractor pool to perform rehabs, which I probably could have figured out over time, but initially it was a turn off.

Lots of threads on these steps doing some searches.

[TCAO]

These are nice parks with newer homes, groomed lawns. Not just one park that looks like this, but several. I think anyone with that kind of money would be capable of managing a park. I imagine the demand is lower than supply of lots. I guess I answered my question this is a red flag and should dig deeper, but wanted to get thoughts from experienced buyers. Wichita has had some major employers move.

FIY I do have the due dillengence manual.

[jhutson]

The test ad will really tell you what you need to know. Maybe their lot rent is too high, maybe the homes are so new that the rents are too high and the market is better for 1980’s homes. If you play with the ad you can usually find the sweet spot for where the demand is, if any.

[frankrolfe]

There is huge demand for affordable housing in Wichita, Kansas. Any park-owned home that the park owner brings in will rent/sell pretty fast. But many moms & pops have no interest in buying homes to fill lots, so that’s why there are so many parks with vacant lots. Even the larger operators often lose interest in the effort-consuming filling of vacant lots once they have hit stabilized occupancy of 80%.

So don’t let the vacant lots be your guide, as that’s a function of supply of homes and not overall demand. The test ad results are much more important.