I have an opp to purchase 25 unit park in Alabama with only 6 units occupied. There are a total of 10 park owned units inc the occupied which are also park owned. The property is large 4 acres. They are only wanting 99k & infrastructure is good. City water & sewer. There is a boneyard of trailers in the area & can be had for cheap but will need tweaking…Boneyard willing to move out old units as a deposit for some of the vinyl shingle better units I need.
Would you touch it if it was your way into your first park? He is also willing to do no payments for a year?
How is the market? Whenever you have boneyards like that I worry about the demographics and economy. You can expect it will be very cash intensive as well to turnaround.
Seems to be a decent market…Southern Alabama 80 white 20 percent black town…Trailer country area…They seem to love them. Other parks in area owned by locals & no one doing any nice entrances etc…
If your pro forma (how you run the park) will work, and you have a good understanding of market rents, capital required, etc. and this meets your investment criteria then sure get it under contract and proceed with feasibility.
First thing I would test hard is that you can infill as quickly as you expect by using test ad. Keep us posted. This is a big project for a first park.
As comes up often, one of the risks in some of the southeast are the weak markets… If your in a major metro might be worth considering. If your in a weak rural area… just have a good understanding of what you are going into. When starting out , I think its important to be flexible with what kind of deal you will get into. Not saying to take a junky deal, but you don’t know everything, don’t have the experience, can grit things through if your situation allows. Theres a reason people want better parks better markets etc. BUT if you look at a lot of the guys that started, they didn’t get a 4 star 150 space senior park. It was probably a good little fixer upper and that experience snowballs etc,
If the bones are good there will always be value in buying a park as they have superior barriers to entry. Take it down because regardless of a recession there will always be a need for affordable housing in that area. Need to build up a portfolio before all the PE firms come in an compress the cap rates further and the trade is over.
Sounds like an interesting opportunity, but as others have noted, be careful not to underestimate just how intensive – work wise and money wise – it will be to fix this and turn it around. I acquired a similar deal – rural property, homes that needed to be fixed up – and it has taken longer than i anticipated. Good luck.
What are your cash reserves? This could be a diamond in the rough, but setting stones isn’t cheap. Expect lots of maintenance that monthly cash flow won’t cover for a while.
I would be testing the market for home sales not rentals. Based on the number of homes required you do not want POHs.
Too much management time and money required to bring in POHs. If there is not sufficient demand for home ownership this is not a money maker.
Sounds like an interesting opportunity. I think we would need a lot more information to get a better picture of what is going on. One thing I do know in Alabama is that most of the metro’s are small and in addition lot rents hover in the $100’s per month. Good luck.
Hard to do but I passed. I think it was a-weak market…Low lot rents, half empty parks & very inexpensive stick built housing in the region…Started to have visions of an uphill battle.
