I have a small park, 7 pads on about 1.5 acres, in the middle of Kannapolis NC (near the new billion dollar biotech park and about 20 miles from Charlotte) under contract for $48,000. All pads are rented, tenants current, and have been for years; no park owned homes. It is grandfathered in. Rent is slightly under market at 150 a month and tenants pay all utilities, which are city water and sewer. There is a “manager” in place who comes by and collects and deposits the checks and checks the meters for 100 a month. I live about an hour from it. I recognize the size of the park hurts the economy of scale and future marketability, but I am just looking to hold and get some positive cash flow. With the reasonable price, I can just pretty much buy it without worrying about outside financing. We are in due diligence now and all is looking good.
This would be my first deal. I think it is a great one to cut my teeth on and make some money. Am I missing something?
The price seems fine (even very good). You will probably have a somewhat higher expense ration than higher rent parks since material costs and labor are the same as those. I think that the major risk is a large out of pocket cost for infrastructure problems so I would make sure that the areas you cannot see are evaluated during due diligence. That includes the sewer and water systems and making sure the electrical is up to code. Check with the municipality to see if there are any hidden issues as well. Since you are paying cash, make sure that you are getting a fee simple interest in the property, and get a zoning certificate to make sure the park is operating legally (conforming or legally non-conforming). Definitely get a Phase I inspection. This will protect you from Criminal liability as an “innocent purchaser” in case the EPA ever finds anything in the future.