To whom it may concern;
I am not a mobile home park investor. I am a small real-estate investor for now.
I had a local man approach me and offer to sell his Mobil home park to me for his loan amount,
Divorce situation.
It
Mike,
I’d need more information to give you even a rough idea:
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Total number of occupied lots (lots that have homes on them)
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Total number of abandoned trailers that belong to park
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Total number of abandoned trailers that do not belong to park
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Total number of occupied trailers owned by park
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City water or well water
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City sewer or private sewer and, if so, what type
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Total population of Metro area (45 mile radius)
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Quality of neighborhood park is in
Thank you for your reply.
I will gather the info you requested and send it
Thank you
Mike
Frank;
Thank you for taking the time to review the information you requested
- Total number of occupied lots (lots that have homes on them)
20
- Total number of abandoned trailers that belong to park
3 no title / 2 titled
- Total number of abandoned trailers that do not belong to park
3 no titles (same as above)
- Total number of occupied trailers owned by park
2
- City water or well water
city water
- City sewer or private sewer and, if so, what type
city sewer
- Total population of Metro area (45 mile radius)
20k
- Quality of Neighborhood Park is in
lower middle class
Thanks
Mike
O.K., let’s look at the basic numbers. 20 occupied lots (we’ll come back to this in a minute) x $150 lot rent (I’m assuming you raise the $135 to $150 after closing – so this is giving the park extra value than what it’s really worth today) x ,6 (assume 40% expense ratio) x 12 (months) x 10 (10% cap rate) = $216,000. Then deduct the cost to get the two park-owned homes back in decent shape (assume $5K each) and the cost to buy and renovate the three abandoned trailers (or take through abandoned property, which will still cost legal fees) which will be around $20,000 maybe, so the current value at a 10% cap rate is $216,000 minus $30,000 = $186,000.
But the next problem is that a park of this size and location is not worth a 10% cap rate. If a 12% cap rate is fair, then the value is $150,000 and at a 14% cap rate the value would be $124,000.
But even then there’s another element missing, which is the total cost of capital expenditures to bring the entire park up to a decent condition – not just the homes – which I have no idea of, having not seen the park. But let’s assume $20,000 or trees, roads, general clean-up, sign, fencing, etc., so the final value would be $166,000 at a 10% cap rate, $130,000 at a 12% cap rate and $104,000 at a 14% cap rate.
Whether or not that’s too much work to hit those numbers, I leave up to you. A park this small is generally hard to sell and finance, so if you buy it, it may be yours for life – unless you carry paper when you sell it.
Frank;
Thank for taking your valuable time to help with the Mobil home park valuation in Villa Grove IL.
After some more investigating, talking to the city, we have come to the decision that the best course of action is to find a way to have the city buy it and kill it, dig it up plant grass seed call it a day.
The part is nick named drug ally by the local
Look at it hard before walking. It’s very possible that the current lender will let you assume mortgage or negotiate with lender & offer less. If its a local bank or even a regional bank there most likely willing to work with you otherwise they have a repo on there hands. If its a local go sit down with his banker. You will probably walk out of there with a lower rate, credit line for new houses & no payments for 6 months. Once that’s done go in there with local police depts help & clean house. You’ll end up with a bank & community that’s going to love you.
Mike,
what happened w/ the park?!
Vicki619
Sorry took so long to reply been working other business deals, what happened to the park is simply bad management and a divorce.
I was thinking, why not sub divide from 25 lots to 10. The buy nice homes / double wide’s then re-sell lot and home
That plan would only work if you can find a lender who will make land/home sales to your quality of customer (who will probably not have a great credit score or much downpayment). Finding such a lender is probably a .000001% shot at best.