I recently put a park under contract (previously I’ve invested in multifamily), and am looking for any insight into whether I’m walking into an okay purchase. My biggest concern is after talking with a mover who is familiar with the park, he stated that he wouldn’t pay much for it since the lots are small and difficult to find homes. I’ve listed some info to see if anyone has any recommendations.
-Center of Iowa MSA area with 500,000 population
-67 total Lots
~10 acres
-4 vacant
-4 park owned homes
-59 lot rent only (some with notes)
-$20,015 in monthly income from lot rent
-$770 in monthly contract income (not sure of term / length)
-$6515 in monthly expense (33%)
-City water / sewer… landlord pays only for water/sewer.
-Asphalt in back section of park has some potholes.
-Built in 1958
-Elderly park (not designated as this though).
-Room to add 7 additional lots (any idea of the cost per lot for scabbed on additional lots using propane?)
-Majority of lots could only fit 60’ homes, although there are some that could fit 80’.
-30’ width from center to center of lots
Would the lot sizes be a major deterence to value? Any suggestions for estimated value? Anything to dig into further?
Do you have a rough idea on cost to move lines if needed for a larger home?
Any help would be appreciated.
Thanks,
Dave
Mobile home movers do not make the best appraisers. I think the guy is wrong. The value would be around $1.5 million based on the numbers you presented. What is he asking?
We like Iowa a lot as a state. The metro population is great. Obviously, diligence would center around the city permits, utilities, and lot density (because the park is old). But nothing you’re saying sounds like a turn-off.
Tell the mover not to quit his day job – he’s not going to be a certified appraiser anytime soon.
Thanks for the response Frank… I bought your great program a while back and am finally moving from multifamily to MHPs (although I’ve been using the 10/15 system in multifamily). He is asking 1.5 and we have it under contract for less than that. Since most of the utilities are under ground, how to you go about inspections… just call a yellowpage plumber and electrician?
Yes, get a plumber and electrician out there. Also, talk to the city on past reports of utility problems. If the sewer has a history of back-ups, run a camera down it. Follow the Due Diligence book to the letter.
Thanks Frank. Since you like Iowa, you might like to know about a property tax loophole that we are attempting for MHPs. For multi-family we form housing cooperatives which kicks the tax rate classification to residential rate which drops it by ~50%. My attorney is fighting the county on this for anoher MHP which may pave the way for all parks that form housing cooperatives (with only the park owner holding all shares). The county is stating that there are no buildings on the property so it is ineligible… but I’ll keep you updated if this is successful in the courts. This would be a great return… 2k to for a cooperative and 50% off property taxes.
Sounds great – let me know what happens.
I did some investigating on the utilities and spoke with the electrician/plumbers that work on the park and found the following:
-The majority of meter banks and pedistals are 60 amp service… a few 100 amp. The electrician thought that I may have to run new lines to upgrade to 100 amp and may require directional boring since it is a tight park… very general comments, not specific to the an individual lot.
-City water is on copper lines with two master meters.
-From a engineering drawing dates 1962, it looks like the sewer lines are either cast iron… and some “newer” Orangeburg tile. The seller mentioned that they fix as fail, but haven’t seen any major issues (I’m reviewing schedule Es from last two years), Also, the plumbing company removed a lift station a few years back and replumbed a portion of the park to allow it to all run down hill with out the need for a lift station.
-Quite a few large trees in park… seller spends money each year removing which is in the documented expenses.
I’m not sure what to ask for next as far as inspections. Is 60 Amp or Orangeburg tile a deal breaker? Should I get an electrician to quote one or two empty lot costs to upgrade to 100 amp service?