ok I promised to give my opinions on parks I have done my homework on to benefit others and this is my first. One reason I am doing this is because I had a friend I did a lot of research for that is buying homes out from under me and cut me out. This happens I guess, but I am not that kind of person so I hope my hard work helps good people as it didn’t me. The Taylorsville, Ga property says sale pending, but I am not sure that will go thru as I have no idea who is on that. I can tell you this, since I am from the Atlanta area, I can tell you taxes are cheaper for all north west properties. Also, this area is close to Cartersville which is a thriving area for jobs so it is within driving distance. All of the Atlanta burbs are moving north and growing along I-75, I 85 and 400 coridors. Thus Taylorsville is north west and just off I-75 highway. Great location, and my big thing is o my god people, 35.45 ACRES OF LAND, HELLO. You know how many mobile homes you can put on 35 acres? yes lots. Plus good location for truck drivers who want a place to park their semi on days off. Lots of room for a pool and upgrades like laundry or putt putt golf. Yes I said putt putt golf. Think outside the box people and stop thinking about just adding a pool. Families look for things to entertain their kids and what will draw them in is playgrounds, pools, and something new like putt putt where there is actually enough room to do so would make this park a better appeal than parks with none of these things. This park was one of my personal picks, but sadly I think someone is trying to buy it, but who knows. One of several reasons, but just based on a quick look I know the location because I lived near the area, and the acres are a lot and the price is low for the amount of land. This park could easily be developed into a big money maker with effort. I will post my homework on other parks I have reviewed later. I will be happy to answer any questions you have regarding parks I know about.
How much income does it bring in every year? What about utilities - city or private? How many pads in the park? How many homes are there presently? Are they tenant or park owned? How much is lot rent? Why are you evaluating it if it’s under contract? Can you please use breaks in your future posts?
Sounds like vacant acreage.
The park you are describing is not worth anywhere near $650k. The area it is in would not support those “non-income producing activities” what-so-ever. Furthermore this is a 32 space park in an area where lot rents likely aren’t even $300. I can almost guarantee it has private utilities and developing the rest of the acreage will probably not be approved or economical. On top of all of this, the roads need a great deal of work. Just because it is 35 acres is meaningless. Acreage in the Atlanta metro is not really all that valuable when compared to other major SE metros. I would venture to say it’s probably even less valuable than areas like Charlotte, any major FL metro, Raleigh, etc. If it weren’t, then you wouldn’t have stick-built homes a few miles closer to town on 6-10 acre lots transacting for $130,000.
The park traded in 2005 for a price that is probably more realistic of it’s actual worth today, $275,000. Anyone who’s interested, my guess is 75 Hawkins Rd, Taylorsville. I couldn’t find the listing but there was enough there to find the park.
Hi Greg, nice to meet you, as promised I answered jhutson in email. It doesn’t matter if he disagrees with the parks worth as any wise man will tell you the worth of anything is what you can sell it for. Since this park quite recently became “sale pending” clearly somebody else with the money to buy it doesn’t agree with jhutson either, in terms of it’s worth.
I can tell you Camp’s Place, MHP is in Acworth just down the highway with only 22 acres selling for $2,200,000 and 45 lots.
That park does actually have a bit better location, but the name of the game is to buy distressed and build, not buy fully finished and pay retail.
To answer one other question, the reason why I am posting my evaluations free is because a big shot investor used me to evaluate pretending to be my friend and cut me out in the end. I would never do that to a friend. I would never cheat people. I believe helping people is the right thing to do.
I lived in the north Atlanta area for a number of years so I know the area well and many of the parks. I know what they make. Zoning for this much land is quite important. I did not bother to give more specifics on this park in my original posting because as I said the ad now says sale pending. It wasn’t when I first began my evaluation. I have no idea who the buyer is.
Please don’t bother sending me an email. I am truly not interested.
Angel
You need to take some time to read through all posts on the entire forum so as to give yourself some perspective as to how the business of MHCs are operated and assessed. Although you may know how you assess value you may find it is not consistent with the overall industry.
On most forums information is generally dissected and pulled apart to get to the real meet of the deal. Nothing is accepted at face value. Every one has an opinion and it is understood that a forum is the place to openly express those opinions. On forums, much like the business of land lording, if you don’t develop thick skin you are not going to survive.
Your last two paragraphs is a clear indication of your inexperience in participation in forums.
CharlesD knows far more than you do, I suggest you re-read his post. If you’re telling the truth and got cut out of a deal, he did you a favor. You really have no idea on how to evaluate parks.
Lastly, this is a friendly forum and there is no place for vitriol like that.
I suggest you put down the bottle of cheap vodka, maybe you’ll see things a bit clearer
For Miss Angel, We try to either ask questions since we all have areas of insufficient information or we really try to be positive in helping our fellow citizens be better owners or managers… I believe you have many talents and suggestive one book you might consider writing is a fiction novel on the exotic experience of owning a mobile home park.
Angel,
Excuse the rudeness in the last message on my evaluation, but you truly have a lot to learn about the valuation of a multi-family asset. These assets are bought and sold on CAP rates. They are based on the income they produce. Vacant land in a mobile home park is effectively valued at $0 because there isn’t usually a thing you can do with it. Even if you can do something with it, it is not something you would pay the seller for because of the complexity/uncertainty of the upside.
Acworth is not a viable comp for Taylorsville in any respect. Lot rents in Acworth are creeping into the $400 range for good reason. Taylorsvile is not there yet and may take a decade or more to get there. Now, on the same token, I can tell you that a large private operator in FL purchased Fairway Villas in Acworth in 2011. That property is 43 acres, over 200 spaces, and a lot rent of $367 with everything passed through. It is also in an area where redevelopment isn’t just a fairy tale. His actual purchase price was $1,725,000. Again, comparable sales give no respect to the management and performance so they are not used.
I agree Acworth is more valuable property and I said as much in my post. I can take disagreements with no issue. However, I see no point in a young man being disrespectful for no reason. If I allowed every person to speak to me in such a manner with no cause I would never be respected. I treat everyone with respect until they show their azzz.
Not every park will be a dream deal and this park was only an observation of what it could be turned into. Not everyone wants to invest in pads, poles etc, and thats ok. However, if you don’t have the land to begin with that zoning allows for more then there is no point.
I do understand cap rates are the baseline of your evaluations, however, you people need to learn there is more than just a cap rate to be considered. You are correct in assessing Acworth is more valuable right now, however, the growth of the entire area is moving north northwest up 75. NOT south. This means 10 years from now when things are booming and that park is built up it could be sold for a lot more that what was paid today, and collecting rent up until that time.
Lastly, to spite the critics here, you forget somebody is now buying this park so clearly they agree with me in that the land is of value based on what the park could be built into. So to tell me my evaluation is not a good one is rather pointless since somebody snapped it up. lol I do realize all men do not have vision as I do and thus why I wanted to help some poor souls. giggle
It’s funny. I did quite a bit of SFH investing in Atlanta before switching the mobile home parks. What I know about Atlanta is that every local thinks they are an expert based on little more than they live there. I also know that the only time I ever lost any money was when I paid attention to what someone “knew” about that market and didn’t stick with what I knew about investing. Just my experience.
What I do know is that Taylorsville isn’t really in the path of progress. Even if it were, the road that park is off of doesn’t have the right kind of road frontage. Your best bet is a home developer and stick built housing is not generally a higher and better use than an existing park.
Atlanta is also a very cyclical market. One where you can make a lot of money if you have good timing. Pretty obvious that it’s a great time to sell there which isn’t a secret to anyone who owns investments in Atlanta. Lastly, we currently own a park in Atlanta. We purchased it from a bank because someone thought it was worth what they paid for it. It didn’t work out so great for that person.
Angle there is a buyer for everything but that does not mean every buyer buys right. The vast majority on this forum purchase based on cap rates as you have observed. Your opinion that there is more to consider may be valid under certain circumstances but on here everything must first pass the cap rate test. Until then there is nothing else to consider.
The idea of providing resort type amenities in a community setting or developing vacant land is not dollar wise with the business criteria I employ.
As far as your concerns regarding respect goes this is a forum made up of mostly total strangers so you may want to view respect as something earned not given. My suggestion would be that you be patient and see how things develop.
I risk fanning the flames of a heated discussion but I agree with Greg.
MHU teaches that mobile Home parks are bought and sold as investments valued on their “cap rate.” Most investors here agree with that philosophy. The investment consists of a capital investment (the purchase) chosen for its predictable stream of cash flows. As Warren Buffet, perhaps the most successful investor of all time, has said: The value of an enterprise is the discounted present value of its stream of future cash flows, and nothing else.
I invest in MHP’s because the risk-reward ratio is, for various reasons primarily related to asymmetry of information, disproportionately low. That is, the expected reward is relatively high for its variance (not much can go wrong). This forum is part of MHU seeking to “level the playing field” by bringing together common wisdom earned through experience.
What you are suggesting is speculation. There are successful speculators out there, but it is not the same as investing – or, to the extent it is, it is higher risk (the variation in outcomes is greater). A brand-new 100-space MHP may take 1 year to fill, or 10 years, or 100 years if managed incorrectly. The fill rate determines the reward and there is a lot of risk (variance) in the potential outcomes. You also suggest that you have special insight into why this speculation is worth the risk (the payoff will be yooge!). Maybe.
The low risk-reward ratio for MHP’s goes up dramatically if you pay for something OTHER than the cash flow. The cash flow is worth trading for an investment (at some cap rate). But a current return of $0 (or less than zero, since you must pay taxes and insurance and overhead before you have single customer) cannot have a positive value (unless the interest rate goes negative).
True, the land is worth something, but the owner must bring in pads and poles as you say (a nice turn of phrase) and, in addition, it is everyone’s experience here that the owner must bring in the homes as well – the customer rarely brings their own home. That’s more akin to playing the lottery – will people want to live in my MHP at rents that make me a profit? That is a question no-one on this forum will have any particular insight into since it’s a pure bet on the market dynamics whether the “highest and best use” of land will be a MHP and not something else (a residential subdivision or a hotel or a shopping center or whatever). You have to look at the comps to determine this and of course, yes that is where local expertise is valuable. So sell to someone local.
I agree with you that zoning is worth something, but very little since the cost of developing a MHP is typically greater than the cost of rehabilitating one, which is something that information and expertise can address. Unlike market conditions, which this forum wouldn’t logically have any special insight into. Even Donald Trump has gone bankrupt speculating on market conditions and he is regarded as a wildly successful real estate mogul. I think most people on this forum would buy the “park next door” based on a cap rate before speculating on the vacant land to expand into.
To put it in numbers, if development of 6 spaces per acre (good modern density) costs $10k per space (low) and a home costs $25k (low) per space, you’re already out of pocket more than $650k to develop the first 18 spaces.
Investing $650 for the land & zoning and $650 for 18 spaces, you’re in for $1.3 million and you might have (on a good day)? $18,000 gross per month if you rent your homes. You’ll have a relatively high expense ratio of 50% so figure $9k per month or $108k per year on your investment of $1.3 million, or a cap rate of 8.3%. Why take the risk?
Or, you could plan to sell (brand-new) homes @ $50k each (good luck) and make $15k per home after you’ve sold out the first thirty or so home lots. That’s a lot of effort to make just a little profit.
In short (not my strong suit), you walked into a den of lions trying to sell them on the idea of starting a zebra ranch. Sure, it might be a good idea. But it’s the rare lion who wants to tend a ranch.
Brandon@Sandell