Hello…I have an opportunity to purchase a MH park in Texas that I’d like some feedback on. Here are some specifics:
Asking price = $180k
16 total spots in park
a) 10 POH homes
b) 4 tenant owned homes
c) 2 empty lots
City water and sewer, i.e. no maintenance
Total rent currently $5,025
a) rents from POH homes (10) = $4,275
c) rents from tenant owned homes (4) = $750
Park currently pays water bill (avg. of $1,000/month)
Maintenance averaging about $500/month currently (should decrease after neglected items are addressed)
POH homes range from 1991-2000 year models
Taxes running $1,300/yr
Inside city limits
- 1 dirt/grass road in & out
First thing I would do would individually meter the water consumption to reduce out of pocket costs. That being said, I’ve run my own numbers assuming 20% down and $20k/yr for maintenance, repairs, water, trash, etc., I’m still coming up with approx. 20% cap rate with 90% occupancy.
Once I pass the water bill back to the tenants completely as well as take care of the neglected maintenance items, I’m guessing I can reduce my out of pocket maintenance & repair costs to around $10k/yr, therefore increasing my cap rate to over 26%. Rent out the 2 additional spaces and this cap rate goes higher.
This looks to be a fairly attractive deal…what am I missing besides a large percentage overall being POH’s? I have a full time job and this park is approx. 1 hr from my house. Local maintenance people for A/C, plumbing, general maint. already in place and on call.
Thanks in advance…