Parks For Sale

I attended the 2008 boot camp and searched for parks on the two internet sites. I really was afraid of the economy and the deals didn’t seem to be that good , so I went on hold. As I look now, the deals seem to be much better with many caps around 11. I realize that sometimes 11 caps turn out to be 6’s but all in all there seems to be slews of attractive deals that have pretty good cashflow. Could those that are in the market for MHP’s comment on what they are seeing being offered right now ?

If you look closely at some of those deals, you will see that all the homes were taken out to redevelop into a condo development. Money ran out and now bank needs to get rid of the property - you have no homes to pay for financing so unless you really have deep pockets or have just won a lottery, it really does not work no matter how the made up number may look on paper.

This is slightly off-topic, but I think it’s very relevant.

The prices may look good, the income may look good, the properties may look good, but your financing is the key to making deals work for the long term. Many of today’s sellers ignored or underestimated the importance of the financing terms and it’s why their properties are on the market right now as they try to unload them before their balloons come due. It’s why the banks have some nice properties they’re trying to sell, too.

Really think through the terms of any financing you’re offered and what the future may look like when the note is due. One of my favorite quotes from Barney Zick is: “Balloons are for clowns.”

I am now of the opinion that the greatest value of a park is in the ability to continue to produce the current income adjusted for inflation for years to come. A park filled with 10 year old homes instead of 30 year old homes is worth much, much more even though the space rent may be the same.

I think we really need to be paying attention to the nose dive in production of single wides over the last several years. For the last 5 or six years we feasted on the glut of repos that could be snapped up for filing lots. These are now gone along with sales on new models that dealers would be pulling into your place.

Mobile homes have a functional life that can be prolonged with extensive repair, but eventually it will become economically unfeasible to do these repairs. 12’ wides and 1 bath units will become harder and harder to rent. Those owner occupied 70’s models (and eventually 80’s) will eventually become abandoned by the owners and become the parks. This once income producing lot will be burdened by a demolition expense and the need to fork out a substantial amount of money to get it to produce income again.

So for me, the age and quality of the homes is one of my highest concerns.

Joel, this topic is one that raises many questions of changing strategies in the coming years. You will read many postings on the MH forums written by people who are honestly sharing their experiences of continued profitable operations utilizing 35+ year old mobile homes. From what I have seen first hand at some MOM events and what I surmise from looking back through the archives at these authors posts are that their market has extremely high cost/ short supply of housing, or the posters are really working to be THE CHEAPEST housing in their area.

For many (most?) of us, we don