New construction

Gentlemen, I have a 25 acre piece of property that is in a light industry zoning currently. The owner is willing to finance the property to me at good terms. There is sewer to the property and the county is willing to change the zoning for me to build a MHP if I build a nice one. I owned a rental park before and now was wanting to build a space rental park. I read your letter about not building one but under these circumstances do you think that changes things? I will be the contractor as well.

What is your estimate for the cost of putting in roads, street lighting, septic, water and hydro. Do you have a projected time frame to bring the community up to a occupancy level for lot rents to create positive cash flow based on your construction costs, debt repayment and ongoing maintiance. In other words have you done your homework.  

Building new parks successfully is a very, very difficult task. I’ve never seen one in my two decades in the business. The reason they fail is that, by the time you fill it up enough to break even, you have already gone bankrupt. The reality is that you’ll have to buy the homes and bring them in to fill any lots at all and, given a 100 space development and a 1 home per month fill rate of bringing it in and renting it out, it will take you 7 years to break the stabilization rate of occupancy. In that time, with interest, the amount you will have in the project has compounded to an impossible level, and you are further burdened with the home debt. Personally, I would stick with buying existing parks that are poorly run at good prices. That’s because I’m not a risk-taker and I like to sleep at night. I’ve never seen your location, and it might be awesome. But the realities of the project stack the cards against you in a big, big way.

I have had the opportunity Chipper but like Frank the risks of a negative cash flow is very unnerving especially   when you see another excellent opportunity and your cash in going into a bottom less pit and your chess moves are zero.    ROI is to risky.    Very interesting that they could change zoning IF IT WAS A NICE PARK.      Their definition of NICE is ???