My parents own a mobile home park which has started and been in the family for 50 years. Some park details:
- $440 base rent
- Not on city/sewer/water
- 75 Lots
- Under market rent about $150-200 (I would say more, as they do all lawn mowing, raking, yard waste removal, you name it…)
- All homes are resident owned
- Rec center for residents
They have not been aggressive or kept in line with surrounding parks lot fees, nor have the services that are provided (to keep the park looking as it does) been taken into account. The topography and outlay of the park is also very unique and not a typical “grid system.” I would compare their park as top-end (aesthetically) compared to the surrounding parks.
Now that they are readying retirement, the offers have been underwhelming to what was expected for a lifetime of work/commitment. I understand that this is going to be the hard truth, but am looking for any insight/experience on the best method to move forward.
- Is it cost effective to wait, and get rents to market before selling?
- Can the actual aesthetics/land layout of a park increase a sale price? (Offers are being received even before seen)
- Would they have more luck selling the park to the residents for a number that is more attractive?
I apologize if this post may be elementary for this forum, I am just trying to help gather some more information for my parents before they make a decision. Happy to provide any further details regarding financials.
Can you provide more details, such as:
How many occupied lots there are?
Is the park on well/septic or well/waste water treatment plant?
How is the sewer/water/plumbing system? What is it made of? Any upgrades in the recent past?
Is the park in a major city or metro? What is the city or what is the population of the city?
What kind of offers have you received and what was their expectation?
This will help get some more detailed responses here.
The information you have provided describes a park that is certainly worth looking into by many, so I can understand your reluctance to accept the first offer.
However, from a buyers perspective, I would want to know answers to tmperrault’s questions, as well as, know how old the homes are.
You must keep in mind that a 50 year old park without regular upgrades is a ticking time bomb. Replacing water and sewer infrastructure is costly, and needing to replace many aging homes a year is quite an endeavor.
Additionally, no city water/sewer tells me it is not close to a metro area. Location of the park is vital.
-Park is on well/septic
-Water/Well system. Well system redone approx. 10-15 years ago. Two septic fields were replaced in past 8 years. (Off the top of my head at the moment, can verify and ask for more details)
-Park is next to town of approx. 9,000
The majority of the homes are from the 1970-80s. (About 5 being newer). Residents have kept many of the homes in surprisingly great condition. I continue to see homes FMV around $10,000, selling for $100,000 in the park.
Unfortunately, the park is separated by a river for the possibility of connecting to city sewer/water. Park is less than one mile away from closest city (9,000 population).
Thanks for the information. Many park buyers look for parks that are in a ‘major’ metro area, ‘major’ meaning over 100,000 people in that metro. Sometimes parks sit just outside of a major metro - these are also considered by buyers. They also look for parks that are not in a flood zone. If your park is near a river it could be in one. FEMA Flood Map Service Center | Welcome! website should tell you if the park is in a flood zone.
The park is not in a flood zone.
Not being in a flood zone helps a lot. And the homes being in good shape helps a lot. I’d say the park is worth a few million… that’s just a guess because I don’t know if it’s in a decent sized metro. What city and state is it in?
Slicz22 you need to contact one of the brokers listed at this form or reach out to have a broker like Kevan E. at Capstone to do an complete workup for the possible sale plus make some needed changes perhaps before it is even listed. Presently without outside help you will be like a small chicken being circled by a bunch of hawks Yes, a life long effort by your folks is great but most multi-park owners ONLY LOOK at bottom line and ALL their hard work is ignored. Keven at Capstone do a fantastic job and will find buyers that will pay TOP PRICE and will not leave money on the table. You have said enough–contact a couple of brokers and see who will best serve your needs
Thank you for the feedback Carl.
I completely understand, and was expecting (as I previously said) the “hard truth” for them.
If you’re looking to sell, I am buying. I own MHPs.
The reality is your offers are based on reality - meaning the actual income and profit that is produced by the park. The number of years of ownership don’t play into value of your asset.
To answer your questions: Your residents likely don’t have the cash to acquire your asset. Aesthetics of the park play a role for sure. If you jack up your rents to quickly you may actually lose tenants if the market can’t sustain the increase. Private utilities are also not ideal, public water/sewer are preferred by buyers.
If you’d like to talk, I’m happy to speak with you. My email is email@example.com
Hello, it really depends on the location. What city and state is it located?
Sold my 73 space park in 2021.Do not leave $ on table raise rents ASAP. ( When the new owner takes over they won’t be shy about bringing rents up to market). A good broker is critical but never forget many brokers have a group of buyers who have bought several parks from them in the past . What’s more important to a broker, the little guy with his one deal or his repeat clientele ? I’m retired. Not interested in buying another park. Good luck. If you want to talk offline let me know.
Brokers stop typing. Most brokers are decent, honest people who earn their pay. This family
need to know that there are a variety of things going on in selling a park and they need to
Also know that there are nonprofits who will
buy a park for the residents and structures deal
for the residents. Homes from the 70s and 80s
are fine. In interviewing brokers you should be able to get multiple appraisals of your park’s value.
I brokered (I’m not active in that anymore) for enough time to get a good feel for that side of this business and I never saw any of those non-profits get into the top 3 on a park they put a bid on. I saw enough transactions to feel pretty certain they won’t be top 3 on yours. The only way to be certain you’ll get the best price is to list it publicly. That’s the only way to put the right kind of pressure on the buyers to drive the price. Most things work this way if you think about it.
Otherwise, without a firm commitment to sell exclusively, any broker who has a brain is going to take it to the buyers who keep him fed and whom he trusts not to backdoor him. Has nothing to do with how little or big the guy is. My best clients were little guys when I look at the Top 100 list. The big guys will kill you with reps and warrenties, especially off market. Mom and Pops are their own worst enemy because they are more afraid their tenants will find out about the sale and call them (God forbid) than to actually do what works to get the best price.
There are 5-10 brokerage houses in this space who do a lot of public listings and who are all pretty much in the same league as each other in terms of getting an individual deal done at a maximum price. List it with one of them, unpriced, with a 2-4 week long call for offers, on a 60-90 day listing, with your parent’s “dream number” as the listing agreement price.
That leaves an out to turn down all the offers and not sell if things don’t work out. Way better than listing at a number that’s too high and getting no action. It gives you the ability to see where the market is and let the broker play the game they are trained to play with multiple buyers in competition with one another. Most brokers will also spend time on your deal if you list it. Off-market deals, on average, get pitched to around 10 buyers because they are a time suck with a low pay out rate.
Have a lawyer look over the listing agreement to ensure you understand where you have outs in that agreement (negotiate the listing agreement as necessary). AND REVIEW THE ADVERTISING MATERIAL FOR ACCURACY. It’s usually the owner’s fault when buyers see inaccurate info and the result is always a lower price at the end of the sale. This is usually the result of the owner being too lazy to look over the offering materials or not asking questions about things they don’t understand.
Good luck to you and your family. Every buyer on here secretly hopes you don’t list it publicly and sells it to them uncompetitively. I noticed, in roughly 100 completed transactions, that the groups who pay the most, typically aren’t the ones cold calling you about your park or posting on here. You want maximum exposure to buyers who pay market price and buyers who are in a 1031. Best way to get their attention is to have it professionally advertised. If you want to ask me anything about the process or who those top shops are, I’d be happy to talk to you about it.
A lot of the questions you asked, will be personal decisions that you will need to make after seeing everybody’s feedback. However, if you would like to sell, we are buying. It sounds like the property is not in a major metro, which is a downside, but if your rents are 440 and they’re under market, that could be an upside. If your parents are ready to retire, I would not wait to fill all the lots and then sell. Many buyers prefer to buy with some upside, but if you already complete the upside, then there is none left for the next buyer.
The information provided by Bobh and TheSteve is very, very, good. Lots of experience and have seen the park business thru the lows and highs. We are owner-operators and very much enjoy that relationship and been blessed with buying most of our parks from first time owner-developers with NO city utilities. A nice family owned, developed, operated business WE WILL PAY MORE SINCE THE PRIDE OF OWNERSHIP IS VISABLE —not every thing is about cap rates, city utilities, or owning multi-parks or having partnerships, syndications, etc. Being just an owner operator is wonderful. Available to help slicz22, just call—over 35 years of experience.
This was an absolute great read. I really appreciate the time and information you shared with me!
This was definitely a great read! slicz22 I’m a new investor in this space. I’d be more than happy to have a serious conversation about purchasing your parent’s MHP.