Almost finishing a deal

I’ve been doing the 60/30 rule on a 18 lot park I’m soon going to buy with the contract being written right now. With the 6-0/30 rule it should have equity of around $26k.

It is 18 lots with all park owned homes. All fully rented with long-term tenants. On the basis of just renting the land for $200 the value of the park is $216k am I correct?

So if it has paved roads, full metered, and it is a clean park am I making out good? my mortgage will be around $1700 and gross rent is $5000 with bills of $1000 month would net me around $2300.

I plan to do lease/option contracts to sell of the mobiles and rent home for about the same price with the current tenants if interested since many have lived in them for years.

here’s the real question. realistically for not a huge park what does a MHP owner expect to earn net monthly? how big a cashflow is realistic should it be very high or breaking even with a basic 10% down as this park is $190k and I’m putting 10% down (170k at 11% = 1700/month)

I don’t use that valuation approach to small parks but whatever you do use, you have the right concept… is the cash at the end of the month worth the headache.

Small parks with rental homes can be a lot of work and as long as you are properly rewarded, well worth it.

Only you can decide if operating 18 rental units is being rewarded enough. If you are not planning on being the handyman, park manager etc. then you need to build in those costs as well as repair expenses and vacancy.

Rules of thumb can ball park a deal to see if they are worth pursuing but the truth is in the details of the deal. Real numbers can cause real headaches if they are only discovered after the closing.


thanks for your thoughts.

I’ve added in many costs. The only thing I’m worried about is ongoing repairs and what to expect. The former owner paid a weekly salary + labor costs + free rent to a handyman on site. Almost 1/4 of her gross income. I plan on making the handyman pay rent and use an outside contracts that only charges labor when a problems arrise. The former owner said she did not try to save money/save on costs so I feel I can save a lot if I have a professional manager run it that will find me a bid on a contractor that will save me money.

I’m currently firing a manager at another park because he has a lack of motivation. Are you suppose to run your own park? It seems property managers are very unfavorable to MHP even though they can earn more for the same amount of time put into it.

It is a personal decision whether or not to operate a small park yourself. It’s not for everyone but I also believe that too many people see the late night infomercial and expect to be a check writer and not a manager.

You may or may not want to do the handywork and that is fine, provided the park supports the expenses and reliable handymen/contractors can be found.

I personally have found that if they are decent contractors, they quickly begin to charge outrageous prices and price themselves out of my market. The handyman folks that live in the parks can help out in a lot of ways but seem to have a limited lifespan in that position. A year or two seems about the norm.

One can become wealthy and financially free doing the one man show like we do but it is not glamorous (that’s for sure). You are also limited to the number of deals you can do. For example, I went into this game full time because I wanted my time to be my own and live a semi-retired lifestyle.

To maintain that status I cannot buy too many properties, just enough to provide for the financial requirements I have and not take up too much more time that I am willing to commit. So far it has worked out great.

Others go out and buy every small park they can find. They are growing quick and if the growth is manageable, they will need to hire reliable help and slowly work themselves into a management position.

Buying the larger parks and storage units like Steve and Corey teach can allow you the opportunity to jump into the management side but in my opinion it would sure make more sense to do so after owning and operating a small park. With that experience you have few surprises and fewer opportunities for contractors to try and take you on repair bills. You will have been there and done that, albeit on a smaller scale.

There is no right or wrong way. Whatever works for you and you enjoy is the right way for you. In this niche you can most definately define your own existence instead of having others define it for you