Rural MHP but with City-Billed Utilities, Concrete Pads, and Garages... Thoughts?


#1

Last weekend I went and visited a few leads that I got from my most recent direct mail campaign. One promising one floated to the top but I’m torn if the area is too rural to justify the way overbuilt park and existing vacancy. Some sane input would be appreciated!

Owner is a farmer that bought the park 25 years ago because he was sick of the residents dumping trash in his fields. He’s done a great job of keeping it nice but never bothered to bring new homes in as people left/ they got repo’d, etc. as it wasn’t his main source of income.

About the park:

  • 28 spaces, built in 1973 with a good layout
  • 5 tenant-owned, 2 rented, 2 vacant/ possible rehab
  • Well below market lot rents
  • All 28 lots are 14x70 concrete pads
  • 13 double garages (26x24 with concrete aprons), all need paint and roofing
  • City sewer/ water which is direct billed to the tenants by the city (owner doesn’t receive ANY bills)
  • New natural gas lines installed throughout the park by the city in the past 5 years
  • The vacant pads were not hooked up for gas BUT the local gas company will do this for free as homes are brought in

The location

  • Southwestern MN, no MSA
  • 1,200 city, 15k county with steady population numbers
  • $50k median income, $105k median housing price
  • All other parks in the area and all were in much, much worse condition
  • $550 2bd rental price point
  • Town government is supportive of filling the MHP back up

Test adds on Craigslist pulled OK but the location isn’t that close to the nearest CL. Owner gets 4-5 calls per month looking for rent-to-own used trailers.

The demographics don’t support bringing in new homes so it would likely have to be used on rent-to-own. I’ve got the owner down to $130k with owner financing (10% down, 5 years, 25 year am) and he would be willing to delay any payments for 6 months.

Assuming I can get 2-3 used homes per year it seems doable and the price point is attractive especially since concrete pads are $10k+ each. He also mentioned that RV Horizons/ Frank & Dave looked at this park a few years back and passed due to the vacancy component.

Any outside opinions would be much appreciated!


#2

I don’t like anything about the data on the location. One thing that could sway me is the distance of the park to the nearest decent metro. If it’s a 30 or so minute drive I’d feel better about it.


#3

The only way I would consider this is if RV’s can be placed in there long term as a means to bridge your infill strategy. Most towns of 1200 don’t care and further confirmed based on what you said about the other parks.

If the RV market is weak or too slow then I don’t see an angle to make it work…


#4

Sounded like a great price initially but I looked again and you’re paying more for the garages than the park and I’m assuming they are sitting vacant/filled with junk and not collecting any income. They are just going to cost money initially. I’m curious to hear if this goes anywhere with you though!


#5

Thanks for the input! Per the RV’s they can be placed in here but the market is limited to a few construction workers on a seasonal basis which the owner already does. There’s not much of a vacation market here.

The only other infill play I see (especially given the pads are only 14 ft wide) is to see about bringing in used FEMA trailers as there 14x66 (3br, 2ba).

Has any one purchased these before? Seeing a lot of 2017/ 2018 ones for sale on the GSA website for cheap and am looking into what moving them would cost to see if there’s something here.


#6

Can you link to what the GSA website is?