What is an acceptable number of units owned by one investor?


#1

I am looking at a 42 unit park with direct billed city water and sewer. The numbers look good initially. The only negative that I see is one investor has 8 units that he rents out and another investor has 5 units that he rents out.

So, the 13 out of 42 units are owned by 2 people. Would this be a deal breaker?


#2

So the other 29 are POH’s or TOH’s?


#3

The park is 100% lot rent


#4

It would not be a deal breaker for the right price however I would strictly enforce screening standards for their sublet tennats and insure the investors comply with all community rules. Make sure their rents are kept at top of market. By making the home owners/investors more responsible and maintaining your screening standards you may make it more demanding on them to maintaine the homes. With luck they may decide to sell.


#5

I am wanting to say I read 10% as being the number at which it is not advisable to go above for a single investor when evaluating a property. Can anyone elaborate on this topic. I understand as the number of homes one investor owns goes up that he gains leverage over you. Is that really likely that an investor will pull all of his homes out? I just do not see someone pulling 8 homes out over a rent increase.

Any input is appreciated.

Thanks


#6

You’re only going to get a rule of thumb from people. I think 5-10% is what I heard, but take that with a grain of salt. It basically comes down to how much risk you are willing to assume for the return.

Also, I would definitely take Greg’s advice. At the end of the day you have to approve anyone they bring into the park.


#7

I push my investors $25 more than the POH’s. Then when the POH complains about an increase I tell him he’s not the highest that there’s about 13 other homes paying $25 more than him. Never had a investor pull trailers.


#8

I would take it in heartbeat. I have similar park. I make all tenants go through background checks. Has worked out well for me.