Should I consider a mhp located on the wrong side of town. It is located in a major metropolitan area, but in an area that no one builds new businesses or new residential areas. The park itself is located in an industrial area near an airport and has no bad neighbors as there are no other neighbors other than industry. Beginning a mile away where there are residences, there is a bad crime problem. Another mile away, also in an industrial area is another mhp with about 20% vacancy. This park is in a bad school district and has 20% vacancy out of 35 spaces. Should I even consider this mhp as I perceive there will be a stigma in getting new residences to come to this area of town. The only potential residents I see would be people who work at the industries. What do you think, pass or look further into the park?
I would say it depends a lot on price and the results of your test ad. Be sure to spell out the exact location on your ad and see what happens. You may even take the extra step of talking to those who call in to get an idea of what you’re working with. Ultimately, I would probably pass on something like that. We looked at a park last year in the slumlord side of Fayetteville, NC. It had a 14-15CAP price tag so we figured we’d give it a look. Showed up to a property that was surrounded by a barbed wire fence and it gave off the vibe that you might get killed in there if you weren’t careful. Needless to say, we passed.
I would do some research at the county and city courthouses / offices. They are aware of the current status, but may have plans that will force the area into a turnaround. If that were the case, could you survive on current cash flow while waiting.
In early 1990, a city called Decatur in Ga, had a bad reputation crime and drugs and several bad neighborhoods. Local gov’t let some plans slip out, homes bought for under $20k, rehabbed and resold were quickly bringing $300k just a few years later-- around 2005, those homes were bringing almost $500k
Is it publicly available information? How would you approach the city representative with such questions?
Councils and or Commissions secretaries attend all meetings and record them, they would know the big picture. Zoning, Code Enforcement, Economic Development and Police could be useful in the actual targets within an area.
If it is a serious high crime area, check with the Fed for what areas they are targeting for things like drug raids, etc.
Don’t forget to read the local paper, maybe searching back editions online for stories related to it.
Forgot to mention, agencies like HUD, VA, FHA, USDA for money programs made available to local non profits for rehab work.
Of the items you mentioned, the big killer would be if you are in a bad school district. That might preclude getting any families in your park. I would run your test ad with the school district in all caps on the front, to see how bad a turn-off that is. If the test ad pulls well, then it may not be that big an issue.
It’s always hard to judge a market as an outsider. The test ad helps enormously. It’s also a good idea – when the market looks sketchy – to contact the Chamber of Commerce to see what they say that’s good about the area (if they can’t come up with at least 5 B.S. reasons, then worry, because that’s all they do is come up with good-sounding B.S.) as well as to call some local realtors and pretend that you want to buy a house in that area and see what they say.
Remember that you are not going to be living in the park, so what turns you off to an area may not be a turn-off to locals who actually live in mobile home parks. I’ve looked at parks identical to yours – and owned some – and they can work out fine if the locals perceive that to be a safe oasis in a sea of bad (my first park was like that). But it will require some great and thorough due diligence.