Hello, everyone,
This is a wonderful forum! I hesitate to ask such an awkward question but how much is the minimum investment for a MHP? In this forum I’ve read responses about the preferred minimum lot size of an investment, but this gives me pause. I’m a retired librarian with only $100,000 to $150,000 to invest. Before I buy books, attend a boot camp, etc. can I please know your thoughts? My goals are to diversify my holdings and increase my monthly cash flow.
Many thanks in advance for your time and attention!
Katherine
First of all, don’t put your entire amount in any investment, whether it’s mobile home park or GM stock. Diversity is the key to success. If you were to use $50,000 of that, it would buy (assuming seller financing and normal economics) a park for $250,000 with 20% down. If you were to buy a typical mom & pop park in the Midwest or Great Plains (because those are the areas we know well), that would be about a 25 space park If you bought it for at a 10% cap rate, that means it has net income of $25,000 per year. At an 80% mortgage at 6%, that would give you a cash-on-cash return of around 20%. 20% on $50,000 is around $10,000 per year. That same amount in a 2% CD is $1,000 per year, and has no upside potential in equity.
That being said, you would need to find just the right park. It would need city water and sewer, and no master-metered gas or electric. And it would need a turn-around strategy to significantly enhance the net income, through raising rents, cutting costs, or something your tangibly control. Filling lots is capital intensive (unless you can get Lonnie dealers or RVs to fill them) so beware of that one profit center. A seller financed deal would typically be non-recourse and require no credit check or loan committee.
Can you find the perfect property? I don’t know, as it depends on three things: 1) how hard you try 2) how smart your approach and 3) luck. But I know that the odds of success if you do nothing and stick with CDs is 0%.
Read all the free articles on this website and see if a mobile home park would be right for your goals and personality. Post any further questions right here on the forum, if you like.
Katherine -
There really is no minimum. I guess one could consider two mobile homes on a single parcel of land to be a mobile home park. And some people invest in ‘land/home’ deals, which are a single mobile home on one parcel of land.
Without knowing all the details of your personal financial situation, I’d suggest you look to purchase a MHP with $100k down (which means you should be able to acquire one costing $400k total), and keep $50k in reserve for bringing in new mobile homes, making unexpected improvements, etc.
To your continued success,
-jl-