Before I post my question, I just wanted to let everyone know that I have already read most of the articles and much of the questions on the forum before I even posted on this site. My goal is to not ask questions that have previously been addressed so as not to waste your time. If I do so, please forgive me.
The link below is for a HUD MH in Prescott Valley, AZ. It is being advertised for $31k. I checked the Tax Assessor website and the assigned value is $44k ($6k for the lot which is approx 0.13 acres, and $38k for the MH). I did a quick check on Craigslist under housing for rent, and the asking rent for similar MHs in this area is approx $500-600. Would this be a property worth considering? My hesitation is that the MH will continue to devalue and the property will be worth less over time. Or would the $500 per month rent offset the depreciation of the property?
I have saved a fair amount of money in order to buy rental properties. I am a serious buyer and plan on buying something within the next several months if a reasoble deal comes up. After careful research I am considering a MHP, MHs, multi-family, and residential housing (in that that order). The one that appeals the most is the MHP where all the units are tenant owned. MHs in general are appealing due to the return on investment.
I currently live in the Denver area, but would consider moving to any part of CO, NM or AZ. I plan on being a hands on manager and would either live at the MHP or very close to any individual MHs I owned.
I should also sign up for the boot camp and get some help from one of you in reviewing the property(s) with the most promise (two heads are better than one). I would be willing to pay for your help.
If any of you would like to contact me directly, my email address is gjhans@yahoo.com
I am impressed by the way people on this website answer questions. I’ve seen lots of good, common sense advice.
Don’t do the individual MH on a lot deal. You are correct that the home is constantly depreciating, and there’s just no money in this type of deal (except for the seller who is happy to find someone to replace his position). Focus on parks – ones with enough scale to make it all worthwhile, like 20 to 50 lots minimum. If you raise the rent $30 per month with 25 spaces, for example, that’s $9,000 per year in your pocket, and you’ve raise the park’s value by $90,000. If you raise a single MH by $30 per month, all you’ve picked up is one extra dinner per month at Applebee’s.
Parks are on a breakout manuever right now, because of the giant, increasing demand for affordable housing due to 1) the average U.S. household getting poorer (around 30% of the U.S. makes $20,000 per year or less) and 2) over 10,000 people PER DAY are retiring into low social security and pension incomes. At the same time, the U.S. government never did anything to promote building new mobile home parks to meet this demand and now it’s too late, and most U.S. cities would never allow a new MH permit in a million years (it’s an even more unpopular issue than cutting out social security payments to the elderly).
If you have a park, you ride these megatrends for a long, long time, as we don’t see any of them easing or improving. Despite the political rhetoric of the presidential election, the average U.S. family is going to have absolutely no chance of making significantly more money in the future, and affordable housing will be the biggest growth industry in real estate.
Thank you for the response. Your assessment is great and I agree with it.
Maybe I didn’t state my question correctly. I was just thinking that if I could find 10 MHs on individual lots that I would own, this might be the equivalent of owning a 10 unit MHP.
But I’m guessing that usually the economics of scale will favor the MHP. I’m just not having much luck finding any where the numbers make sense so far. I bet that’s not uncommon, LOL, and everyone is looking for a good (fair) price.
Also for someone starting out, maybe it is best to get a smaller park (10 to 20 units?) and just find one where the tenants own their homes. I appreciate people’s comments on this statement.
I did find a couple in Phoenix AZ where the numbers seem favorable, but they are of the “packe like a sardine can” type (15 units on half an acre for exaple), so I will avoid those.
I appreciate your welcome. BTW, I like to help people also. I’m an old car fan and can help answer questions regarding the old timers. My specialty is old Mercedes (especially the diesels), but I’ve worked on anything from AMC Gremlins to Studebakers. So if you have a question on old cars, let me know…
If it’s a mom & pop, often 100% – they throw out a price that’s a good deal and we take it. Through brokers or parks that have been put out on the market, the seller typically is asking more than they want, expecting you to counter. In these situations, it’s anywhere from 5% to 20% less, based on the park and how much they’re asking.