Hello, I would be grateful for any advice from this knowledgeable group:
I have a small MHP that has 11 park owned homes with only 8 being livable/rentable at this time. I mentioned earlier that this place has a zoning of “commercial”, I have talked to City people & attorneys, and there is no loophole for me to replace the distressed homes, I can only remove or repair them. So I have spent a ton of money fixing much of the issues of the 8 livable homes so far. (Every bit of rent plus more money from us has gone in to rehabbing the homes. I am out of state to the property so all is hiring contractors to work on things, and often I’ll find out later something is not done or has to be fixed, it’s just been a nightmare).
My thinking was the only way I can try to recoup all these expenses is to fix all the homes and then pay back with rents for many years and then finally sell to a mom & pop type buyer.
However, a developer will be making a new development adjacent to my < 4acre property. They have indicated they may be interested in purchasing this land. They want me to give a price. I have a realtor who will help me with that but I have a few questions in that regard from a larger audience:
• Would you use the normal “mobile home park” formula for valuation to come up with a sale price even though the developer would not be buying it as a MHP?
• Would you look at “cost per acre” of nearby sales and go with that and ignore anything you’ve put into the property?
• Most of our expenses have been to fix these homes. Should I count for any of that in the desired price to the developer? No one would be buying these old homes for the price of the rehab that has gone into them. Would a developer normally pay something to “compensate” for such a loss since the homes would need to be moved or dismantled?
• Is there any “increase in value” in selling a property that is Commercial zoned rather than residential zoned? (I don’t know if the developer would put something commercial there or just ask the City to rezone to Residential (which as unfair as it would be to change it for them and not for me – I wouldn’t be surprised if the City does because they’d be so happy to have achieved another removal of a MHP from their midst – I’m told there were 4 others around that have been closed down over the years))
• If they really wanted the property wouldn’t they have approached me with an offer? Is this a certain strategy to ask Me for a figure hoping I’d give a low number?
• Anything in particular to watch for or to be aware of in these types of sales?
I have checked with a MHP only 3 miles from me, property mgr has about 4 spots but she says it normally costs from $15k-$20k to do the move and setup with city utilities ($7K just for the city to hook up water and electric and whatnot on a new spot) So it is not feasible for me to move the homes for my tenants and continue a rental agreement for them. Her lot rent is $450, my rents are from $650 with one just now at $1050, and it would take quite a long time to pay back the moving costs out of the remaining rent and (even pretending there are no repairs to do on the homes during that time that is unrealistic to take that long to recoup the moving expenses). Are there any usual costs that the receiving mobile home park covers? Or is that $15k-$20k all up to the incoming house owner?
It is very hard to find rentals in the area so I will feel bad for the tenants if I really end up selling to the developer, not to mention that that would mean one less MHP when it’s not easy to make new MHPs.
Thank you for any insight.