MHP deal/development opportunity

Hi, I’m working with owners of a MHP in OH that have a stabilized community consisting of about 100 lots with Lake Erie frontage. Many of residents are seasonal. City utilities. Below market rent ($20-40) and no utility bill back currently. Nets over 300k. Vacant land on both sides of community could be developed (zoned single family). Opportunity for someone, ideally with development experience, to acquire prime water front land with the MHP income stream. To acquire the entire property, they are asking for a price that equates to about a 5 CAP based on current numbers, or the park and about half of the vacant land can be acquired at closer to a 7 CAP range. If anyone wants more information, please let me know.

Vacant land attached to the sale is obviously having a negative impact on the park cap. If the park can be purchased without the vacant land it would be a much better investment.

I probably have talked to these park owners. Or if not them, similar other ones in Ohio - but from your description we’ve talked in the past.
It’s important to point out that

  1. Their model is not classical MHP. It’s “resort area” based around mobile homes. I.e. not full time tenants, but full time rents. Not necessarily a bad thing but just pointing out.
  2. They are holding out for the value of the land, not the park.

I think you need to negotiate harder on price. Buying such a location at a 5% - 7% cap is basically paying California pricing for an Ohio park. I just can’t see that making sense. I would think Ohio pricing is in the 9% cap range.

We are having no difficulty finding pocket listings at 10% caps in the greater midwest (including one now under contract in Ohio) , and even a few with attractive seller financing (Ohio again). Indeed, none are lakefront, but money is green; the point is simply to ‘make money,’ not to ‘make money from sexy waterfront properties, that I can then talk about at swanky cocktail parties and impress my friends.’

My (crude? unsophisticated?) 2 cents worth,