In rural OK. Outskirts of city with 20,000 residents (5 min from a Walmart). High need for affordable housing. City is thriving and growing- economy good. Current mhp is rough but has waiting list.
Mhp is 41 pads. 20 are rented with park owned mobiles- all very old. There are another 21 very old mobiles on pads not rented. Some are f the 21 remaining vacant mobiles need some heavy Reno before renting and some would certainly need to be removed.
Current Gross rents (20/41 rented)= $12,200/month (all park owned)
Utilities are city with several septic systems for sewer.
Owner pays water but has put individual meters on each mobile and bills water back to tenants.
Appears to have big upside as I can negotiate with owner based on current NOI but more than half the park is vacant.
How to value this? I would like to make an offer but this is my first mhp. Any thoughts/help would be massively appreciated!
Thanks!
@kprimrose
Ken,
How far away do you live and do you have the skill set to rehab these homes yourself? Not to perfection… but just to get them liveable.
Sounds like a great location!
Rog
It depends on what you want, but it’s generally recommended on this forum to convert POH to TOH. You end up not making much money in the long run on POH, according to Frank Rolfe. If this is what you want to do, you should really only value it based on the lot rents. If POH are renting for $610/month, let’s just say lot rent for a TOH would be $400/month. 400*20=$8,000/month. Assuming a 40% expense ratio (generous considering private septic), NOI would be $4800/month or $57,600/yr. If you want a 10% cap rate, the sale price should be $576k.
I live 2.5 hrs away but I won’t be rehabbing mobiles myself.
Thanks for your thoughts Brandon!
Brandon, I would agree with you if those other 21 lots were empty but Ken is looking at some serious cash outlay to renovate the rehabable and then the cost of pulling and dumping the garbage trailers. Another vampire park owner who sucked the life out of their park. If Ken has to spend 10k per trailer just to sell for 5k and then another 10k to pull the garbage out… that should come off the sale price. Just thinking about it…
Oops I missed that part about those homes. Yes I agree! It’s unfortunate but hopefully will allow you to grab it for a low low price.