Monthly rental income $27,400. This works out to approx $550/m per unit
I was told that the space rental alone would be $350/m. Therefore each mobile home on avg rents for $200/m, on top of the $350/m lot rent.
The average build year of the MHs is about 1965-1970. The vast majority were build before 1980.
The owner lists a total “estimated home price” of $322,000 or approx $6,400 per unit.
The tenants pay electric and gas (individually metered). The tenants also pay water, but there are no individual water meters so I will need to look into exactly what that means regarding the water.
The asking price is $2.3 million, which makes the price per space approx $46k. Based on my research on this website it is richly priced at this time.
My concern is that, the MHs being as old as they are are not really worth what the owner is asking. Even taking that in account, the MHP still seems too high in price.
I would like opinions as to what a fair asking price for a MHP such as this might be.
Based on my review of this helpful website, park owned MHs may not be the way to go for most of us. How difficult would it be to convert this MHP to a “lease to own” park?
If you need more info, please let me know and thank you very much in advance
Before you even worry about the economics (which are horrible on this deal), a bigger concern is the density. You are talking 25 homes per acre here. That’s too dense. The perfect density is 7 per acre. A reasonable density is 10 to 12. You can even get up to 15 O.K. based on the layout. But 25? I doubt that it meets the current fire codes even. I’d check that out before you waste any more time on it.
As said before, that is way too many homes crammed together. That would also make me wonder on home size limitations? You should check with the local codes and see what would happen if some homes were destroyed? Existing homes may be grandfathered in and not be able to be replaced due to codes. You are also looking at a crippling loss if you have a fire with that many homes because it will likely burn many homes.
Now let us go back to infrastructure. With homes that close how are you going to get heavy/large equipment in to upgrade or repair the infrastructure? I emptied most of my park because of the way things were done so I could do things right and make it easy to maintain.
Don’t fool yourself in to thinking owning a mobile home parks is all roses because there is a lot of federal regulations coming down that you will be dealing with if your park has master water meters. This business is tough and you will have to deal with a lot of crap but it can be a cash cow in the end.
Thank you for the responses, they completely make sense. I’ll stay away from that one and keep looking. There are a fair amount of MHPs out there with 20 or more MHs per acre. I’ll try to avoid those and maybe just consider 10 or less units per acre.
I wanted to ask about the following statement posted above by Okie Bill:
Don’t fool yourself in to thinking owning a mobile home parks is all roses because there is a lot of federal regulations coming down that you will be dealing with if your park has master water meters
Can someone let me know what those Federal regulations might be with respect to the master water meters?
The only federal guidelines that have appeared are the SAFE Act – which may soon be amended to effectively exclude mobile homes – and other nebulous requirements such as the Red Flag Rule (which nobody is really sure if it applies to mobile home parks). There are an endless assortment of items that pertain only to manufacturers through HUD. I’m not aware of anything else on the horizon. But if I’m missing something else, please let me know.
There are already state rules on sub-metering water and billing the usage back, so you definitely want to be fully aware of these laws before you engage in billing back water/sewer. They differ from state to state.
And it is 100% true that owning mobile home parks is not a bed or roses. If you own a great park, then it’s a terrific business. If you own a lousy park, it’s the worst business in the world. You need to know how to find the former and avoid the latter.