I know there are many MHP development skeptics out there, but with replacement cost being well below retail value of lots in most good markets, it seems sensible to pursue development.
For various reasons, my destination options are eastern PA, NJ, (So)FL, and CA. All things equal, which state seems best positioned for MHP development for the next 5, 10, 20, 30 yrs?
A bit about me. I’ve turned around 3 medium/large parks in PA the last 5 yrs. I am willing to do all age or age restricted. We have our own bank doing direct lending to consumers, which gives us a leg up too.
I would look at the best market within 4 hours of home to prove the model, and so I can be more involved than I would otherwise. That’s just me, from the peanut gallery. I don’t think I have the peanuts to move and develop an MHP all at the same time.
??development cost less than existing cost of a mobile home park!!! What do you knowingly base that comment on–have you developed a park in the last 5 years??? We have developed over 60 spaces in the past 5 years BUT only to existing parks that have room to expand. For us developing a new MH park we would never do since WHEN will breaking even occur–5 years, maybe 10, maybe never!! unless we have a nearby park that is FULL and there is a massive demand. With over 30 years of hands on experience we would rather try a RV park since most all of our parks our partially RV’s than straight MH’s but presently with tiny homes, and RV’s our demand is 3 to 1 RV’s to MH’s. Would you move a nice home into a 1960’s park with old homes that is less than 80% occupancy and roads poor. There are many NEW RV parks built in the last 10 years–WHY!!! but very few new MH parks–is it a dying entity!! the problem you are hinting at is that parks on the market are OVER priced and especially when we have a major downturn like 2008–remember!!! and the one simple fact there are TOO MANY buyers to sellers and that leads back perhaps to the promotion for training from this website. MHU is doing a great job but if there are really few it any new parks being built and lots of new training is going on to buy parks; easy to understand what is happenings. 15 years ago self storage was above a 15 cap but is now??? Just some observations–like GREG we like to own and operate outstanding nice properties without the deed beats!!
All things equal (assuming you can get the zoning, which seems to be the biggest stumbling block in development), the two things I’d be looking at are:
(1) Market Pad Rent - Go as high as possible - Why develop in a $300 market, when you can put in the same effort in a $600+ market? (There are even some $800+ markets in FL and $1,000+ markets in parts of SoCal)
(2) Absorption Rate - I have seen a 100-space park in Houston developed and completely filled with qualified tenants in under a year. It’s quite the sight to behold, but you need insatiable demand. Guessing there are markets like that in certain pockets of states you listed.
Those two things point to some of the more heated markets of NJ, FL and CA (again, assuming you can get zoning).
Thanks for the helpful input everyone. I am expecting to take a decent profit on the recent park flips, and want to apply my lessons learned to a new ground-up venture. Fortunately (thanks to the flips) I have patience and a decent war chest for legal and engineering fees to get it started. I will check back once I decide which place to build.