Looking for Advice on my first MHP deal

mobile home university
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Hello All!

I am looking at this deal. Not 100% sure about it. I would be greatfull for any advice or guidance on it.
Thank you!

Price: 50K
Location is pretty decent. Near a golf course and middle class neighborhoods.

Lot rent 250-275 per month
17 Pads now. There may be room for more pads. Trying to confirm.
6 empty mobile homes- Park owner has titles for half. Others have to file for loss titles?
Present time- Only 4 paying tenants. So around 24% occupied

Has a 2 brm house on premises (managers office?)
4.4 Acres
City sewer and water
Park has gas and electric meters to the pads
About 50% clay and 50% schedule 40 PVC for sewer lines
Water pipes are mostly galvanized
Park in rough shape, needs 6 dead trees removed, trash clean up, 2 sewer risers are not sealed, needs new gravel, potholes filled and up to 3 of the MH removed if can not be rehabbed. They lost their license and new owner has to bring park up to standards for license renewal.

The owner claims that 2017 and 2018s financials were loss by a computer virus ?? He is waiting on IRS to get filed returns. Anyways this is what I have.

Financials: 2016 2015

Trailer & Park Rentals $22,027 $17,711
2016 and 2015 Expenses:

Auto & Travel $300.00 $810.00
Cleaning & Maintenance $725.00 $822.00
Insurance $400.00 $400.00
Management Fees $2,400.00 $2,400.00
Repairs $1,210.00 $1,720.00
Supplies $91.00 $760.00
Property Taxes $1,853.00 $2,488.00
Utilities $10,047.00 $10,197
Other $1,525.00 $1,411.00
Total Operating Expenses $18,551 $21,088

Net Operating Income $3,476 -($3,377)

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I think if the real price you stated is $50000, I don’t know what to evaluate here. That’s dirt cheap in probably any market.

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At 50,000. If it’s not in a war zone and IF the city isn’t about to shut everything down. Then it’s a deal. Having done a few of these smaller parks even though there are less zeros on this it’s still going to be work. Just don’t think it’s going to be totally passive and not need about twice that to bring the park to peak performance. That’s my 2 cents worth.

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Past expenses are not of much value this being a turn around investment property. It will cost a great deal of money to bring this up to a positive cash flow. Provided you have deep pockets, plenty of patients and the determination to put in some long hard hours it could have a good long term investment/pay off.

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Thank you everyone for the information and advice. I just found it has 6k in back taxes too. I can already see the money starting to stack up on the wrong side. Now I’m hearing I might be in a bidding war… So we’ll see

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If this is your first park and you have ZERO experience in this space either partner up with someone who has a little more experience to help you rebuild it or walk away. $50000 is dirt cheap. Overtime the numbers will work. But in the meantime it will cost you a lot of time, commitment, and money (and a lot of mistakes if you are new) to bring it back up. You might want to possibly consider a Lease/Purchase arrangement in this type of scenario. However, either way its going to take a lot of time and a few dollars to rebuild.

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This will not be a simple park to run initially. You have a lot of moving parts. You will have to consider that you may make a bunch of mistakes that will cost money so factor that into your equation. Also, you may want to be geographically in close proximity as you will have to check up on lots of things since you won’t have much to pay a manager.

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Yeah, I can tell already that its going to be uphill. But I just seen another one go for 200k with less pads. So that gives me some hope that this one could be profitable in the next year. So I guess I’m hoping for upside in after I get it cleaned up ( If I buy it) . I’m not afraid of work and have resources and pass experience in Mgt, construction and some real estate (landlord). So I think I can turn it around. Its just the amount of money that I need to bring it back up to standards, that’s what I am trying to figure out. And as far as proximity I’m about an hour away. So not too bad. But I still don’t want a money pit.

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I know exactly what park you’re looking at. My biz partner and I were seriously considering putting this under contract and did initial due diligence on it, but as I calculated the expenses, I also found out it stacked up on the wrong side. Even if price dropped to $15k or $0 I had doubts it’d turn a profit so we passed.

Happy to talk more on this via message or call. Just DM me.

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Well, I was just informed by the broker that it was just scooped up in a 2 park deal. I guess it wasn’t for me.

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I think partnering with an experienced owner is a great idea. The appraisal will be largely based on the potential income, but it sounds like you’d almost be better starting from scratch. You’ve got plenty of work to bring this property on-line and up to speed.

Good luck, no matter what you decide.