I went to the MHU boot camp and I understand why 30+ units park makes sense. However, does it make sense to buy smaller parks (10+ units) if you can get it in the great area and with the high cap? I do not want to burden you with the details. I just want to hear your opinions. Thank you.
I own a 17 lot park.
I paid $207,000 for the park. It has public water, sewer and even public roads.
I make about $1,600 net on the park (after debt service). This includes putting 12% of gross rents into a reserve fund for repairs and realistic expenses.
Is the park going to make me a multi-millionaire? No. Is it helping me to save and cash flow to afford a bigger park? Absolutely.
I would estimate I spent less than 4 hours a month on the park. I do only live about 30 minutes away from the park so that helps.
Whether or not a small park works for you depends on what you’re trying to do.
I did pass on a 9 lot park with public water and sewer because I didn’t think there was any margin of safety. That is what I think makes smaller parks tough - no room for error.
That’s $1,600 a month. BTW.
The biggest issue I have with smaller Parks is that they’re often run terribly. The buyer will be upside down financially several months to cover debt service (if you can get it) while evicting and replacing tenants / homes with ones that are quality.
A scenario I do like for the smaller Parks is when you have a 30+ pad park down the road, and can add a small one into that market portfolio (e.g. a “bolt on” Park). Can use the manager from Park #1 to cover the small one, and only incremental costs from existing maintenance crews, repairmen, etc. Utilize existing local bank and monthly processes, etc.
I just sold my smallest park which was only 8 pads. I owned it for 9 years. I made about $500/mo (after debt service) off of it while I owned it. When I sold it, I had it paid off and sold it for 100k on contract. So I am glad I had the park and will get paid for years to come from the contract. This park was only 20 minutes from my home. I would not buy anything that small if your business plan is to hire a manager and the park is far from your home. However if you manage your parks yourself and are trying to grow your business, small parks can be a great stepping stone.
@Andriy_Boychuk , as per your question:
- “Small Mobile Home Park - Does It Make Sense?”
Everyone needs to start somewhere :-).
Thus, if the small Mobile Home Park makes a profit; is stable; and you will manage the MHP, I would say “Go For It”.
My Husband (and I agree) said that small Mobile Home Parks are a great way to learn the business without getting in over your head.
I love the statement from @steelcitydavid
- “Is the park going to make me a multi-millionaire? No. Is it helping me to save the cash flow to afford a bigger park? Absolutely.”
My Husband and I started with a stable, 24 lot MHP and then after a year purchased a 65 lot, turn-around MHP.
We wish you the very best!
One thing to consider carefully is that you might get seller financing on a park that size but years down the line if you want to refinance for whatever reason no bank will touch it simply because of the size - as other shave said though if the numbers make sense then why not?
Small locals banks will often finance smaller parks.
The problem with this deal it is almost 6 hours from my home and I know nobody in the area. If somebody interested in the deal send me PM and I will provide you the seller contact info. It is 11 pads park in PA. city water and city sewer
What general part of pa? @Andriy_Boychuk
North Huntingdon, Pa
Do you have any more parks in Ohio? I’m in Columbus Ohio and my company is active in 3 parks at the moment. Always looking to network and help parks out.
I am in NE Indiana, not ohio
@Andriy_Boychuk, depending on what your expectation are - it might work or it might not.
I personally would not want to spend time managing (by managing - i mean - you still need to overlook operations even if it’s a stable all tenant owned home park) a park if it’s only generating me $500 or even $1500 a month. Probably the amount of time one would spend on a 10 lot park is about the same as on a 40 lot park.
But everyone’s situation is different. There are probably people on here that would not want to touch anything that is short of a 10k a month NOI, just because that’s what they value their time at.
@dimochik the post is very old but thank you for the response.