This is such a wonderful place to learn this wonderful business. Thank you all for contributing.I have found an off market deal through a friend that is highly interesting. - Small park- <50 lots- 100% occupancy- Long term tenants- Only a couple families- No park owned homes- W/S directly billed- Trash paid by owner - Market tests via Craigslist returned double digit responses on the first day and continued without renewing the ad - Lot rents are $100 below market rents and test ads were done at a higher rateMy question to the experienced in this forum is; As a first time park owner, is it worth take some profits off the table for reduced risk in an area where mobile home parks never change hands with the details above?Any extra advice is always accepted with open arms.Thanks
I’m still new but with that potential for increase I would just have a look at what your cap rate will be after simply raising rents. Sounds like a park you need to get under contract. Then dig deeper.
I don’t understand what you mean by “taking profits off the table…” Feel free to clarify.But we plan on an indefinite hold period (not, however, and indefinite time until we refinance and pull money out to purchase another property). The path to wealth is not in flipping, but in holding. I would not be worried about low turnover of parks. In fact, I’d prefer it - low park turnover probably indicates other MHP owners in the area are quite happy.My 2 cents worth,-jl-
Thank you Jefferson. I meant a lower cap rate around 6-7% vs 10+%. I realize that wasn’t clear now, sorry.
Parkdreams, I would say that depends on what your investment criteria consists of. With a 6-7CAP, your cash-on-cash will likely equal what you could earn if you passively invested in a professionally managed syndicated park fund. If you insist on going through the riggers and hassle of ownership, I would advise against any investment that doesn’t give you a conservative 20% cash on cash return on day one and a clear path to doubling in value within the next 3-5 years. It takes a lot of time to find such an opportunity, but that time is worth it when you finally find it. Such a deal will quickly make up for the months or years your money sits on the sidelines.