I’m new to Mobile Home business and like to verify whether my first deal is a good one.
The park is north-western state in a small city ( < 500 ) with below characteristics
Number of of lots : 12
Number of tenant owned homes : 4
Number of rent-to-purchase home : 1
On City Sewer and Water
Potential to expand to 2 more lots
Monthly total rent : $5000
Monthly expense : $2000
Asking price : $285K
Manufactured Year of Park owned Trailers :
2 - 1981
1 each of 1973,1978, 1979,1982,1984,
Just need a first order analysis if its good to proceed for further due diligence.
Check that out as an example. A town of 526 in a metro of 9.4 Million. And if you look at how strong that market is, would be great to own a park there.
Im not sure if this is the case with posters example but I think excluding on town size by itself it bad advice.
@MKV , can you give us a break down of the lot rents versus home rents? Are all 12 lots currently occupied? In the monthly expenses, does that include water and sewer as one of your costs?
12 lots x $240 rent x 12 months x .5 (net of expenses) x 10 = $172,800. You then add in the value of 8 mobile homes (let’s assume $5,000 each but it’s totally based on the age, size and repair of each unit) so it’s maybe worth around $212,000.
The only way you can hit the seller’s price is if 1) the homes are worth more than $5,000 each (but I doubt that based on the age) 2) the lot rent is significantly below market and has a huge amount of room for increases or 3) the seller will carry the financing with a tiny amount down, non-recourse for a 10+ year term.
I think I would offer this seller $200,000 and see what happens. If you lose it, I don’t think it’s the end of the world, as it’s not the most compelling deal I’ve heard today.