Hi everyone,
I’m considering my first investment in a mobile home park (MHP) and would appreciate some advice from those experienced in this sector. The park is located in South Carolina, close to where I live. Here are the details:
- Number of Spots: 24
- Occupancy: 100%
- Home Ownership: All homes are tenant-owned except for one brand-new 2024 park-owned home on a rent-to-own agreement.
- Lot Rent: Currently $494 per month on average, with potential to increase to market levels around $600 per month.
- Financials:
- 2023 Gross Scheduled Rent (GSR): $128,755
- Effective Gross Income (EGI): $124,545
- Total Operating Expenses: $23,379
- Net Operating Income (NOI): $105,376
- Proforma Year 1 GSR: $142,200
- Proforma Year 1 NOI: $112,464
- Utilities: Direct billed to tenants (city sewer, water, and electricity)
- Maintenance: Roads are asphalt, and the park was developed between 1969-1990
- Asking Price Range: High $1 million range to be competitive
Questions:
- Valuation: Based on the provided financials, what would you estimate the value of this park to be? Does the high $1 million range seem reasonable?
- Investment Viability: Given the current NOI and potential for rent increases, does this park appear to be a good investment opportunity?
- Concerns: Are there specific concerns I should be aware of when evaluating this MHP, especially given its age and tenant-owned home structure?
I’ve been interested in the MHP space for a long time but have not yet made an investment. Any insights, especially around the financials and valuation methods, would be greatly appreciated.
Thank you!