I’ve been looking at smaller parks in the SE (AL, GA, SC, NC, TN) and all of them seem to be priced as if they are 100% occupied or producing strong income, when in reality most of them are majority empty or need a lot of work (collections, low rents, etc). These aren’t necessarily high land value areas either. (example: 30 lot park with 10% occupancy priced at 400k)
Is there something shifting the in SE market leading to these owners pricing their parks much higher than they were previously? 6 months ago I was seeing similar parks priced much lower.
When there are +25 buyers for any park listed and lots of first time buyers are closing–sellers are basically leaving nothing on the table; sellers are just pricing according to demand—we have not bought a park for the last 3 years but have completed 10 DD sessions but in the details we find major problems. This is a sellers market–buyers beware!!!
If what you’re saying is true, and I find no reason NOT to follow your reasoning, maybe its a good time to stockpile cash for when the newbies crash and burn.
In the business over 30 year-- why would a potential seller receiving over 5 companies soliciting them a month wanting to buy your property not raise the selling price to the sky? Ten years ago some excellent properties with a 10 cap did not have buyers, but sellers were trying to liquidate to cover the loans, taxes, insurance, etc. on their properties since their residents were laid off. We are finding +10 caps on some campgrounds but they require lots of hands on board to manage. We have never bought parks with POH but presently the majority of parks for sale have them but at one time where FULL with NO POH. The MH business is in constant change and as parks are being consolidated our government will have a much easier time making major changes!!
Do not take seriously what sellers tell you their asking price is. You want to come up with your own numbers and give them that price with the intro “here’s the price I came up with – what am I missing here?” See how firm they really are. We have often paid 50% off the on-line prices. Carl is correct that there are more buyers today than 20 years ago, but there are still good deals being done every day if you look hard and try to be a deal “maker” rather than a deal “killer”. Just look at how many deal assignments there are on the forum these days.
The southeast is seeing higher asking prices because that region has always lagged the other sectors of the U.S. as far as mobile home park prices and rents are concerned, and they often base their asking prices on what they see in Denver or Houston. It’s kind of like cars. I used to own a 1964 Triumph TR4. It was about a $15,000 collector car. Then one sold at an auction for $94,000 when two buyers got carried away in an auction environment and everyone though that one sale established the new price. Sellers poured into Autotrader asking $90,000 but none of them ever sold again at that price. Those who needed the money retreated back to $15,000.
Remember that virtually all park buyers use leverage at roughly 80% LTV. So we are all totally controlled by the same lending standards. As a result, we all can only pay roughly the same price if we’re going to get the bank to sign off on it. What makes the seller choose one buyer over another is normally more about bonding and the way the offer is presented, and not the price.
I have an excellent small Park under contract I’m looking for a 1/3 partner if you’re interested let me know it’s good cash flow parks in great shape thanks Tom
tjm 9988@gmail