Small Park, Private Utilities, Great Location - Would you?

mobile home university
1

Deal specifics (Off-market):

Bestplaces.net:
Major MSA = population 3M
3 bedroom apt = rents at $1700
2 bedroom apt = rents at $1300
4.5% unemployment
Average single family costs $350K

Park Details:
20 spaces
18 lot rents at $450
WELL and SEPTIC
Location is very good
Comparables = $550 - $750
Asking $540K
No Seller Finance

Would you pursue it?

Thanks.

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@jo13nathan , as per your post:

  • “Small park, private utilities, great location - Would you?”

How much acreage is the MHP?

As per your post:

  • “Well and Septic”

Personally, I do not like both Well and Septic.

I am fine with Public Water and Septic (if there is enough acreage to drain the septic).

With both Well and Septic there is a potential for the Septic to cause issues with the Well Water.

Can you connect to Public Water?

If yes, how much would it cost to connect to Public Water?

We wish you the very best!

3

Depends on some info not in post. What are you looking for? Stable cash flow no upside. Stable cash flow small upside. Stable cash flow big upside. Where is your upside? 2 vacant lots and increase in rent (you need to firm up your comps on lot rent is it 550 or 750?), garbage bill back? There is the potential for some decent upside depending on your comps.

How will you manage it? Are you close or far from the park. What’s your comfort level with Wells and septic?

My guess your going to have close to a 50% expense ratio after adding back in capex for the well and septic. It would probably be close to 30% expense ratio if you don’t account for capex on well and septic (which will schew valuation). My guess is with with current rent and occupancy noi will be 40 to 50k a year. No way to know until you run the numbers based on actual expenses not formula numbers picked out of the air. Just one line items say property tax could make or break your whole deal with only 100k in gross. If you can figure out the management and are comfortable with wells and septic and the actual numbers make sense go for it.

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Thanks Kristin and Phillip. Here is some more information:

  • Park is on 3 acres.
  • There is no bill back for trash or anything else.
  • Park could be hooked up to city water and sewer but I don’t know what that would cost.
  • $550 comp is solid and probably and tad more.
  • There is currently onsite management who gets compensated with free lot rent. I wouldn’t change this as I run my parks the same way with a greeter.
  • I have the P&Ls and all the expenses. My projected P&L shows a 45% expense ratio.

My parks are on public utilities and I understand the risks of well and septic and although I am certainly not experienced with these systems. There is only one reason why I’m even looking at this thing and that is because it is located in the one of the top 5 most expensive counties to live in the country. The land alone, if it was clear of homes, is worth the asking price.

This is a typical mom and pop - kids don’t want the park - kind of deal. I’m just trying to decide if I even want to do any more diligence. I originally passed but now I’m just mulling it over a bit.

Thanks again.
J

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The Msa sounds about like where I live. With the gross being 100k travel to it becomes a significant expense unless your close. As long as you dont have go there much or ever or if you live close it would be a fine deal. If it was me I would tie it up and do some due diligence. Then you can figure out the condition of the well and septic and find out the tap costs to connect to the city utilities. The tap fees can be brutal. I have seen some with 5k to 6k or more a lot but every city is different.