Just found this forum while looking around for something I’ve been thinking about and want to see if I am way off base or on to something.
A little background on me first will set the stage. I’ve been building houses and doing small commercial for over 7 years. I’ve survived this market by only having one lake home sitting, one new development (main reason for this post), and a wife who has gone back full time to help bridge the gap.
Myself and another partner bought 26 acres just outside of Knoxville about 2 years ago. Underground utilities, everything provided by local utility company, 59 good size lots and a nice playground area of more than an acre. We have a really nice model home on the property (1,800 sf, 3 br, 2 ba) and cannot sell anything, or if we find a buyer, they cannot get financed. After building and dealing with all the headaches and now trying to survive in this market, I began thinking of converting this to a mobile home park several months ago. I am getting serious about it now and need some opinions.
My thinking is this: make the 58 remaining lots into 100 mobile home lots, use the model home as the clubhouse and office, and find some investors to put the trailers in for rent and/or fill it with owners who rent the lots. Clayton homes has a financing arm in town and a good friend is the manager. We’re to meet next week and discuss ways to get our name out there.
Now, let’s talk math, because this is a different animal than building houses. At 100 lots, our current note plus extra to do what we need to do would be right at $1.5 million, or about $15,000 per site. Our monthly note on the model home is $1,200 per month as well, so factor that into monthly debt service.
So, my major question is, does this sound like the way to go? I KNOW, all too well, that banks are not lending for homebuyers unless they are perfect. I also think this is just the beginning and affordable housing will grow in demand. This property is 20 minutes from Knoxville, about 2 miles from the local high school, and within a 20 mile radius there are three major retirement communities with multi-million dollar homes and golf courses.
After building houses and getting my snowball rolling, I have watched it go back to a cube of ice this year and really want a long-term viable business with decent cash flow. Any thoughts or help on this from what looks like a very knowledgeable community would be appreciated!
Mike in TN