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 wouldn’t know exactly how many used homes you could find to buy, but perhaps you have a a good enough idea what’s 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.