I just looked at a park in the midwest. The park for sale had about 5 vacant lots & 7 vacant homes of 48 lots and the park across the road had about 60% vacant lots of 48 and the quality of the homes was very bad. Another Park about 3 miles away had no vacant lots but vacant homes. About 100 miles away I looked at another park for sale and they had about 50% vacant lots but asking above $1.5k.
I have just started looking at parks for sale and am worried about so many vacant lots and homes. Sure I skip these parks and keep looking? Or are these the parks people think they can build up and become more profitable?
Take it as a learning experience especially if you are getting started. Your time will be well spent looking at it and make you a better investor should you decide to get into parks. The park in itself with vacancy is not a deterrent. When you say that a lot of parks in the area have vacancy , it can be more of a concern. My next step would be to look at who owns all the parks? Are any of them corporate owned and managed or all mom and pop? If its corporate thats more of a concern, if mom and mom , still a concern but maybe not as much.
Whats going on with the local economy/ general trend of people leaving, coming, sideways? Any projects in the works ? What are the lot rents of the park and the ones surrounding it, whats the unemployment rate, average house price, average 2 bedroom apartment rents according to best places.net?
You are buying the park and the market so you have to research both in depth. Here you will want to put a lot of additional emphasis on the market. Good luck
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You also need to take into consideration the demographics of the surrounding area. If the surrounding area is a solid middle class and the parks are deteriorated to a C/D class it may be possible that the owners are simply not providing what buyers want. It may be necessary to buy at a steep discount to enable you to upgrade the community to what the area needs. Reality is that not all communities want or need welfare housing.
If there is demand for housing then vacant homes that can be rehabbed equate to extra money in your pocket.
Sometimes the current owner doesnt want to be bothered rehabbing the homes or doesnt want to spend the money.
7 vacant homes rented can be an extra 3000-3500 cash flow every month. Not bad.
For me the biggest challenge is always finding homes in my budget. Renting them has not been a problem
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Thank you for your reply. It makes us look at it from a different angle.
How would you go about finding out that the homes available are just not what the buyer or renter want to live in?
On another note, how does one deal with decaying homes that people are living in? I would think that doesn’t help the vacant/empty lots issues either.
Yes, I realize that could mean more profit in my pocket. My issue is how do you go about finding out if people will come with nice rehab homes or homes moved in? Before buying a park, is it wrong to run an ad for RTO homes, seeing how many people would respond to it?
Search the term “test ad” on the forum , its a suggestion to gauge demand and will get you a better understanding of how to phrase it , where to place, etc.
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I’d add that while lower vacancy properties often offer the most investment upside, they generally also include the most investment risk, most work, and most liability risk. Moving in and out homes, selling homes, refurbishing homes is an added risk and insurance cost for park owners.
There is a wave of more and more park owners buying and installing new homes. It’s more cost but the numbers I’ve seen at some MHC conferences have been impressive