We have an additional 20 acres of land next to our park that we were hoping to parcel off and sell. Unfortunatly the only access to the land is through the park so that killed that idea. We then found original blue prints to the park and that land was going to be phase 2 of the park build out. The original owner put in sewer and electric but never built out the lots. So it would mainly take putting in a road pouring pads and bringing in water.
My question is how would we determine at what price point does it make sense to do this. Our lot rent is $300, these would be lake front lots so we could probably get 310-320 and the residents pay water.
We will be 100% occupied by middle of next year and the demand is great where we dont have any problem selling homes we bring in.
Given what you are saying about the demand, I’d probably go ahead and build. It sounds like your incremental cost (roads, water) should be $5,000/lot (unless there are government/environmental impact fees, etc.). At your lot rent, each completed lot should be worth $310x70 = $21,700.
But, of course, you are getting into the housing business in a big way, and you could always purchase another MHP with fewer POHs. When you say you are able to easily ‘sell’ your mobile homes, are you getting fully cashed-out? Are your residents able to get bank financing and outright purchase the MH from you? Or are you taking $1,500 down from low-credit residents that are really just renting from you with a large security deposit?
Ultimately it’s a judgement call as to whether you build out your lots, or purchase an up-and-running park. Run the numbers. Think about what your time is worth. It sounds like you are experienced enough to know what you are getting yourself into management-wise and capital-wise regarding bringing in all those new homes vs. just buying a new park where you’d own fewer homes (but probably have to pay much more than $5k/lot).
But if the economy is really that strong for your expansion, you’ll probably not go wrong either way.