I’ve invested in SFR for 10 years, but I’m new to the MHP world. I recently found a park in GA that has been owned by a bank for nearly 3 years. For some reason, they didn’t begin to market it until last year. Since the residents have been living without oversight (and rent-free) for so long, the park has become rundown. But I think it has great potential.
It’s just over 7 acres and has 56 lots with city sewer and water; each lot has an individual water meter. It also has natural gas. The main road is paved and maintained by the city. The park has one dirt/gravel road. I’ve spoken to the city and county authorities, all of whom have assured me that the park is grandfathered and will be permitted to continue as a park and without unreasonable restrictions (i.e. homes must be newer than 1976). The utility office is unaware of any repairs needed. And it’s not currently in violation of any laws or ordinances.
There are currently 39 homes, at least 29 of which have active utility accounts with the city, but they are not currently paying any rent. Taxes are not current on the homes. I’ve spoken to several residents, all of whom expressed their desire to stay and willingness to pay rent. When I asked what their rent had been (prior to the bank taking ownership), the answers varied from $110-$150. I think I could rent the lots for $150. I spoke with the managers of the other parks in town; one rents their lots for $140-$160 (nice, larger lots) and they’re 95% occupied in one park (200 pads) and 100% in their smaller park. Another park in town (300 pads) has many openings, but the rent is $300/month (including water, sewer, garbage) and it’s not as nice a park.
My concern is turning around this park. Many of the current residents moved in after the bank took possession. Some/most bought the homes from the former owner (who retained titles), but they never transferred the titles to their names, so they’re still in the name of the former park owner (the bank foreclosed on the land only). From what I’ve been told, it’s become a drug haven. There are pit bulls tied out at many homes. But the long-term residents said it used to be a nice park and I believe it could be again. It borders a very nice housing development with homes in the mid $150s. I think it’s worth improving.
It last sold for $1.2 (with many POH). I currently have it under contract for $175k. I think this is a great price for the infrastructure, but my concern is turning it around. I don’t think on onsite manager could handle it, as I believe it will need close professional oversight that I could not expect from anyone willing to live there. I found a professional manager in town that’s interested in taking on the project. I’ve spoken to the former owner and identified a respectable long-term tenant who could possibly assist by being the eyes/ears in the park.
My intentions would be to send an application to each current resident and requre that they meet new guidelines (i.e. no felonies) and that they’re willing to comply with new rules (i.e. no ‘dangerous’ dog breeds). I realize that I will lose a large portion of residents immediately, but my focus would be on building a safe family park and not simply filling spots. In speaking with some of the long-term tenants and the former owner, I believe I could be reducing my occupancy to as little as 10-12 tenants initially. I don’t think the others are likely to move the homes (most are mid 80s) and the former owner said I would be able to obtain title to them. I’m not interested in renting the homes, only the lots. But I’ve had several people express an interest in remodeling the homes and renting them out. I’m not sure how long to expect it to take to turn the park around. I’m hoping the problems will leave once they realize they must be approved, pay rent, and follow rules. But I will still have to resolve title issues, allow time for home renovation, and market to a new demographic. A contributing factor is that the park has acquired a bad reputation in town. It’s a fairly small town of about 15k, but it’s commutable to much larger cities.
I don’t live in the area, so it’s not possible to be ‘hands on.’ Do you think it’s feasible to turn it around from a distance and without an onsite manager? Any other thoughts or ideas I should be considering?
I’m excited about the park’s potential, but I wonder if I’m crazy to be taking on such problems. Has anyone else had success in turning around such problematic parks?
Thanks for your input.