Hi MHP Investors,
When you are adding homes for infill purposes what percentage of new vs used homes do you find end up filling your lots?
I would guess this could vary from market to market, how much effort you put into finding and rehabbing used homes, market ability to support new home purchases, and so on.
I ask because when I am modeling a 5 year projection the proportion of new vs used homes impacts operating performance. For example a new home through 21st century mortgage would not require any out of pocket cash, where as a used home less than $10K would not qualify under 21st century mortgage.
If I had big infill (tough these days I hear with limited home supply) it could require much more out of pocket expense if I have used homes. Or for example if I financed used home purchases to bring into the park with a line of credit I would need to model the debt service for used homes and how that impacts cashflow etc. But would not have any debt service if it was a new home. So what do you use as plug numbers to model before hand? 50/50 used vs new? 90/10?
I assume going in you wouldnât know exactly how many used homes you could find to buy, but perhaps you have a a good enough idea whatâs out there based on your experience that you could model your infill over time with some solid estimates.
Thanks for any insight you can provide.
Best,
Travis