Buying mobile home park

We are looking at a 29 unit mobile home park.

23 of the 29 spots are currently rented at about $135.00/mth.

None of the units onsite are owned by the Park.

Town has a population of about 2,000 and trading area of about 14,000. A number of mines in the area also.

Sewer / Water is on the town water system. Park pays for water quarterly.

Land area is about 6 acres.

What do you figure a good price would be?

There is no assumable mortgage and the owners are not looking at doing any financing they just want to cash out and move on.

They just finished repairing some water leaks which already has brought the water usage per quarter down.

Any insight would be great.


Al Bundy

So off the bat- just with the numbers you have posted I would pass UNLESS there is upside in the space rents to at least 175…

Parks are based on CAP rates, which are a function of net operating income NOI.

Without being too long winded- a park with 135 / month rents is probably worth something just shy of 9,000 per pad. That assumes a lot of stuff, and is based on 40% expenses and a 12 CAP.

So now the problem- a home will cost you more than that to buy, move in and set up. So to raise the value of the park by setting new homes, you will actually need to invest more than you will gain- though I know you will someday get your money back in selling the homes- it still feels funny to invest 10 or 12K, to get 9 added back into the overall value…

Now I am just one voice in this sea of contributors- but without a strong market rent survey- I would pass on this deal…

What’s the price of the park? That’s the most important part of the question.

Price is 165,000


And one other note for the water / sewer lines.

the water line black plastic, and the sewer line is asbestes cement under 5 of the trailers

as far as they know the rest should be plastic s.d.r. 35

They just repaired a major water leak with some Hydravac equipment in May and water costs have come down bringing the total expenses to 40%.