I just went under contract on a mobile home park in Odessa city limits. I am not from Texas and my only park is in Minnesota. I know West Texas is heavily dependent on the oil and gas economy but that is as far as my knowledge goes. Looking at Odessa’s metrics it has a 125,000 population, $175,000 median home value, 3 bedroom rents of $1,500, and an unemployment rate of 10%. An argument could be made that Odessa/Midland is one big metro area with a 350,000 population. Lot rents are strong in the area at around $400.
The park is full so there would be no infill required and the infrastructure is good with asphalt streets, cement parking pads, sidewalks, pvc water and sewer lines, and all city utilities. Homes in the park are all 1990’s models and it is a clean well run park.
There is not much upside in raising rents as they are about at market and no upside in filling lots. It is under contract at just about an 8 cap.
I would love some insight on the Odessa/Midland market. The heavy oil and gas economy is a concern to me. With the large population and in town location of the park how much of a concern should this be?
Another concern of mine is water supply. In West Texas is there a growing concern over water table levels, future rationing/increased costs? The park is on city water but still a concern.
Property taxes for the park are low, however rates seem to be high in Texas. If revalued at the purchase price the tax bill could go from $3,500 to around $30,000. To be safe I am using the worst case scenario in my numbers but how likely is it that they jump after sale?
What other concerns should I have in this market?
If it was your money are you buying this park in this market?
Any and all feedback is greatly appreciated.