I was listening to the bigger pockets podcast today and noticed the guest was Jefferson Lilly speaking on why you should invest in mobile home parks.Here is a link. http://www.biggerpockets.com/renewsblog/2015/02/26/bp-podcast-111-unique-profitable-real-estate-niche-youve-never-considered-with-jefferson-lilly/Jefferson - the park in Tulsa you bought I was trying to get and the broker kept telling me it was under contract! Now I know who got it.
toben -Thank you for the words of encouragement! That old ‘Oaks’ mobile home park is indeed now our newly branded ‘Tulsa Estates,’ and it is humming right along with 33% upside in rents, and another 10% of the empty-but-not-in-bad-condition POHs now renovated and filling with new tenants. Plus an additional 25% upside in infilling the park with new mobiles.That deal was on LoopNet for a year. The price they were initially asking equated to something like a 6% cap, so we let it sit there. I checked-in periodically with the broker, and came up a bit from my first low-ball offer as their numbers improved slightly. But in the end, they came way down, and offered some seller financing. So we got the deal done at around an 8.5% cap, with significant upside. We also lined up a $500,000 line of credit with Clayton Bank to infill the 20+ vacant pads.It’ll be a home run when all is said and done in another 12 months (probably 50%+ IRR), but it’ll definitely be some work between now and then.I guess the lesson learned is that there are good deals out there, you just may need to wait them out and be persistent but not desperate with a broker.To your continued success,-jl-
Yes I told the broker I was looking for a 10 cap and he basically said good luck with that.There is a lot of upside as the parks closer to Tulsa are up to $300. When I first started looking at parks, I wondered why parks in Dallas were getting $400 lot rents and parks near Tulsa were getting $175. Well fast forward a few years and several Tulsa parks are now $300 and climbing. Within 3 -4 years I bet Sapulpa is in the same spot.Let me know if you want some help looking at Tulsa parks. I have looked at every park that comes on the market within an hour of Tulsa, but ultimately I keep buying duplexes because I can find the deals easier and I am still working on how to understand brokers with their 5 and 6 cap properties trying to tell me what a great deal they are. I know of a 35 unit park nearby you may be interested in if you want a fixer upper.
Toben, being in the business for 40 years there are NOW more buyers than sellers in the park business. Until CHEAP money disappears the race to secure parks will continue and I am watching buyers in low equity positions trying to buy more which was the undoing of some park owners in the 07-09 period. There are areas in Tulsa that you do not visit at night!! Visiting with syndicators it is very interesting all the fees being paid to finders, mentors, and management fees, etc to felicitate a sale. There is a very interesting discussion amongst certain lenders and brokers as to certain parks for sale and P and L"s being shared. There are syndicators right now looking to spend millions on parks since WHERE can one get a return on their money and be secure. Remember what goes up will also go down–I have looked for over 3 years and the true numbers from sellers, vacancies, problem areas, POH etc. are not inviting.
Do you currently own any Parks Carl
Sounds like you own several. Nice.
Yes we own several but we go against the normal with No debt, husband and wife team, and niche markets–we have owned family parks in the past but like the retirement markets and people with second homes. Why? in fifteen years no police needed or evictions and people pay on time.
No debt is a great way to go. It can take a while to get that train rolling when starting out though.
thanks for the feedback Carl.
We have had debt but we always position ourselves if a fantastic buy occurs we can walk into our local bank and within 35 days close including an appraisal. The game is to buy at least 25% below value and own decent properties with great resale. The day we buy we try to determine how it will sell better with certain changes since the game is double your money in 10-15 years.