Quick eval for small park

'm looking at a 24-space MHP in Eastern, Tx

  • 24 Space Park, 12 currently occupied. 6 TOH, 7 POH (one vacant /trashed)

  • Lot rents $250 - $300.

  • Separate nice Double-wide / built in garage on 1 acre, currently rented @ $1250. (comps in area $68K - $123K)

  • Located < 5 miles to small city, population > 80K, Metro area > 200K, Park is in top-rated ISD.

  • New Septic system. Park pays Master-metered water.

  • Only a few of the vacant lots are ‘ready to occupy’. Most need utilities completed.

  • Asking price = $385K.

  • My valuation =
    12 LOT rentals total = $2900 X 60 = $174,000 (based on lot rents $250 - $300)
    6 Occupied POH @ $4000 each = $24,000
    Doublewide on 1 acre = $75,000

Total Bid + $273,000

Am I close?
Sent this to Frank also, but not sure when he may be able to respond.

Assuming your test ad reveals good demand, and that the low occupancy is solely because of mismanagement…

Your expense ratio should be closer to 50% due to low occupancy, private septic, and already smaller Park. Will the new septic handle up to 24 homes or will that be an additional capital expense? Also 75K on an acre in rural east Texas is rather expensive. That’s retail prices and you may only be able to make money owner financing that holding the paper. Is that on it’s own septic and well also?

The Seller is clearly pricing in the value of the POH rent so he won’t understand any of your logic with a low offer. You should try anyway and just follow up every 45 days with the Seller or Agent until they see the light or find a sucker. I would be closer to 225K for this deal, and you would be lucky to find anyone to finance it. I would move up some with attractive owner financing terms.

MHU has a service to get their formal opinion on a deal, and it’s worth it: http://www.mobilehomeuniversity.com/mobile-home-park-investing-books-and-courses/mobile-home-park-quick-deal-review.php

Frank chimes in from time to time on the forum, but if you’re looking for more than that the above is the route to go.