Considering purchasing a park and here are the basics:
• Park was built in 1978
• 33 spaces
• Gravel roads gravel pads
• Yearly taxes $2,700.00
• Purchase price: under $75,000
• Most of the electric pedestals are original and many would need to be replaced.
• 4 abandoned homes (not worth repair as the windows were busted after vacant)
• Small Midwest town of around 1,000, within 50 miles of larger communities, 20 miles to a population of 10,000.
• City is stable, not really growing, not dying.
• City water / sewer, but outside city limits (master meter)
• Was full or near full up until late 2016 (have seen google earth images)
• Owner died and things went to hell really quick. Park had a couple of issues that caused it to vacate (water bill not paid, and a sag in the sewer main caused some backup) Local officials say not a major issue, one day’s work with backhoe.
• Has recently been re-approved for proper zoning with county with some acceptable stipulations.
• City has agreed to continue water / sewer service
• City, and county are wanting it reopened and are cooperative
• Have talked with the local mobile home repair guy who works alot in the area. Said there are homes available within a reasonable distance that could be purchased and moved in. He is also willing to do work as needed.
• I would also want to add some new units with the CASH program
With all of that said, would you consider purchasing this park?
Do you have time and money to deal with a project like this? You’d probably have to bring 10 homes just to start having positive cash flow. Filling 10 homes in a small town may take a while.
This would be a very cash intensive deal, so it’s not for me - and here’s things to think about:
Rents in small towns like this are usually not high enough to support the CASH program. You will likely be 100% out of pocket on your infill strategy.
What is your plan for repairs if the mobile home repair guy is busy or you learn his work is bad? Finding good help in small towns like this is NOT easy.
Get several estimates on the sewer fix - don’t trust city officials in a town of 1,000.
Replacing windows on a mobile home isn’t enough to keep me from repairing a mobile home. If the inside is completely trashed and will take 10K or more to fix then okay I gotcha. But the windows alone you should be able to fix for under $1,000.
Your test ad will be crucial to understand how quickly you can fill it with tenants (either selling the homes or renting them).
If you go through the process of the city’s stipulations, also consider bargaining with them to start providing the trash service to the indidivual pads too. Not every day you get to negotiate items like this - use it to your advantage.
I’d be concerned with demand for sure. May be worth running a ghost ad locally to see if any demand for housing. Pretend you are looking for a cheap rental and see how hard it is to locate one.