I have what seems like an outstanding opportunity for a 50 pad MHP and would like some valuation ideas. It is owned by an elderly gentleman that lives 2 hours awayfor the past 34 years and he recently lost interst and just let it go.
50 sites (19 occupied)
$200 current rent (last increase 2016)
one POH
onsite sewer treatment that was inspected and certified 2015
three wells on property
tenants pay utilities except water and sewer are included.
is he willing to seller finance? if so, what are the terms? if he doesn’t want to maybe you could do a master lease option. and whats the price? How many park owned homes? and are all 50 sites vacant? or do they have a home that needs rehabbed? is it in a metro area of 100k plus so you can fill the vacant homes?
based on what you gave $200 x 19 x 12 x .5(smaller park w/ private utilities) x 10=228000
With private utilities…you have to ask yourself is the risk worth the reward. Just based on the information you gave, I would pass, but I don’t like private utilities. Or if a park does have it, there has to be something really positive that makes the deal great. owner financing with no payment or low payment for a couple of years.
also plan for the treatment plant to go out. to be conservative that it may cost couple hundred thousand to replace it.
One last thing to think about on any deal is your exit strategy. With private utilities for both water and sewer, when you go to sell, your buyer list could be limited because many investors shy away from parks that have both water and sewer on private utilities
What kind of sewer treatment is taking place? There is a big difference between tank/drainfield, verses lagoon or package plant.
The seller is willing to finance with 25% down non-recourse 15 year term with five year balloon. I have negotiated $175k with those terms. One park owned home in good condition rented at 350 plus lot rent other 19 lots are rented to residents that own their home. Rents at 200 but other parks in the area range from 225-250. Currently there are three wells but only two used on regular basis with third as strictly a “back-up” which the seller said he has never needed.
I have not investigated the sewer but from what broker said it is a “holding tank” that pumps it into a drain field which is certified for up to 75 homes but as of now the park has only 50 rentable spaces. Expansion would probably need city approval beyond the 50.
Supposedly just a couple of years ago the park was operating at fuller capacity but the owner is in his 80’s and lost interest in the park and has done absolutely nothing to try to keep park filled.
I’m absolutely not an expert, but unless YOU’RE an expert, I’d run far far away from private utilities. I’ve read here that the government is cracking down on private utilities with new and difficult regulations and requirements. Whew. When buying a park, “city services” was on my absolute must-have list. And be sure to factor in the difficulty reselling a park without city services. It sure wouldn’t interest me.
Be vewy vewy careful…
People don’t move trailers out of a park without good reason, it’s expensive to do so. That’s the red flag to me, why did they all move out? Just because he lost interest??