Thanks to everyones encouragement and advice on this site
I am about to contract my 1st MHP. It currently has 7 spaces all occupied,with room for 4-7 more depending on whether DW or SW. It also has a 60’x180’ bldg.(once used for mechanic shop business). It faces a major well traveled street with grade school 4 blocks down. Price 200K with owner carrying 140K @ 12.5% for 3yrs.,int. only. All units are sep. metered for elect.,gas . It has new 2" water , 6" sewer (both city supplied) with easy access for other units. Current rents total 3600/mo. Annual exp. have averaged around 10K/yr. It is located in the Houston , Tx. metroplex. I would sure appreciate any advice or opinions on this deal as soon as possible if any can spare the time.
Thanks in advance for all of you great folks’ time and help over the past year.
You need a phase 1 and possibly a phase 2 report on that building due to its previous use. Don’t even think about buying this place until you get the OK on toxics. If there is or ever was an in-ground car lift associated with the building, I would advise you not to buy the place. These are almost always toxic problems with these devices.
That interest rate seems a bit high and the term a bit too short. It may be more than 3 years before some semblance of normality returns to the lending business.
You infrastructure sounds pretty good and that a huge plus for your first park.
The shop didn’t have any lifts,just a concrete floor and is actually pretty clean for a shop of any kind , especially a mechanics shop. That is a great point that I never considered though. Your comment on interest and the 3 yr. time frame is actually my biggest concern. Can I get it refinaced in three years . I figure I can if I add more units and and increase cap rate 5-6 points,but I don’t have the experience to fall back on----yet.
This assumes the 140K financed at 12.5% is ammoed over 20 years with a 3 year balloon (call).
round numbers this leaves you 14K on a 40 K investment (plus closing costs) or 35% return (excluding closing costs). Not too shabby…I don’t like the 3 year call…5 is better. banks like to see a couple of years of returns and it could take a year or two to bring in additional homes.
Any way to sweeten the deal? Seller to pay closing costs? Less down? Lower interest rate?
Can you immediately raise rent 40 per space? Do you have the capability of bringing in homes at once?
I know that hobby area of Houston well and it is very strong on rentals. Not trying to third degree you but this takes some thought…what do you want your money to earn?
sounds like a decent deal to me if you have cash or credit to bring in other homes…just my .02