I am considering to purchase a small mobile home. The park mainly consists of RTO that will be ended in 1-3 years. CAP on the lot 13%. 50% discount on the RTO balance. This is a cash purchase. Some homes are in need for repairs. Can I ask tenants to repair their homes while they are still in RTO term or after they own the home?The park is in rural area with 6K population. Metro 200K population within 15 miles. Economy is stable. Minimal upside. Only 4 vacant lot. What I don’t like:1. Some homes are in need for repair2. The layout is not neat3. This is probably 2-3 start parkWhat I like:1. Near metro2. All city utilities and tenants pay direct. Electricity all 200 amp.3. No natural disaster4. NO POH. 99% are RTO.5. Since this is my first park, I thought this is a low risk one.6. NO income taxLet me know your thought. Thanks.
It appears as though the present owner has just recently taken what was a 99% POH community and converted to RTO. The reality is until the RTOs are completed this is still a 99% POH community and the likely hood is that many if not most will not complete the RTO contract. Doubtful you will be able to shift the responsibility of pre existing repairs to the tenants at this time.
Please indicate number of sites to see if there is economy of size and a justifiable return of time input and also future sale.
Greg/Carl,Thanks for the quick response.Total 21 lots. $180K (lot + RTO contracts). 4 empty lots. RTO mostly started in 2013 and 2014 and will be ended in 2015, 2016 and 2017. The fact that tenants are new make me concern. However, per-seller no tenants pass due more than 30 days.I have been reading this forum recommendation to purchase 50+ site to meet economic scale. However, I thought I can buy this small park and buy nearby park later.
What is the level of lot rents in park and top rate in surrounding parks.
Rent Range $84-$150. Subject is $150. There is one park $350.