MHP Evaluation

mobile home university
1

I’ve been looking to purchase another MHP and wanted some feedback on the numbers. Currently the MHP’s numbers look like this:

  1. 79 Total Lots

  2. 44 Lot Rent @ 125.00

  3. 11 Park Owned Homes at 380.00

  4. 24 Lots Unoccupied (no current demand for individuals to bring in their own mobile homes)

If I give no value to the park owned homes and base the value on lot rent only, I can assume:

55 (lots) x $125/month x 12 months x .6 x 10 Cap = $495,000

Even if I purchase the MHP at a discount and agree on a price of 400,000, my monthly numbers will be:

  1. Income: 125 x 55 lots: $6875

  2. Expenses: Wat/Sewer/Ect. $2750 (based on 40%)

  3. Mortgage: $2808 (based on total asking price 400,000/6%/20y)

This leaves a monthly positive cash flow of $1317. I’ll need to pay someone to collect the rent so I’ll lose a portion of this income. If I looked at this deal in 2007 I would of purchased in a heart beat. In the current economy, is this worth it? The park is older and in need of some general clean up. Your thoughts please.