Thoughts ? Deal or No Deal?

I currently have a deal under contract which consists of two smaller parks totaling 45 spaces in small town of 11k. On the surface appears to be decent opportunity. Have just started the due diligence process. I would be seeking an active or passive capital partner on this however first things first:

14 space park
31 space park
(5 minutes from each other)

45 Spaces

  • 31 Occupied (69%)
  • 14 Tenant Owned /17 Park Owned
  • 4 Abandoned Homes-3 Salvageable
  • 3 Vacant Move In Ready Homes
  • 7 Vacant Lots
  • POH -70’s and 80’s
  • Sewer lines recently replaced in the smaller park
  • Avg Lot Rent $160(recent increase from $125 which is low)
    I think rents can be bumped up to $200 range.
  • City Water/Sewer /individually metered
  • Tenants pay all utilities

Market Stats:

  • Metro of Wichita County 150,000 Population

  • Burkburnett Population 11,000

  • Low Unemployment 4.6%

  • Household Income 50k

  • 2BR Apts $680-$790

  • Med Home Price $88500(Burkburnett) $103000(Wichita Metro)

  • Lower Crime Rate

  • 10 miles to closest Walmart

  • Price $210,000

  • Owner wants cash out, health issues has caused park neglect

Value Add

  • Rents could be pushed to $200
  • Convert POH Homes to RTO/LO
  • Fill Rent Ready Homes
  • Fix up and Sell Vacant Homes(
  • Fill Remaining Vacant Lots
  • Opportunity to Double Value of the Park

1)Zoning- 14 spc park is legal, the other appears to be legal non conforming zoned business/commerical --waiting to hear back from city inspector. who is dragging his feet , to confirm. However if that is the case on the one park …no homes can be brought in to replace any vacant pads which currently there are 3 in that park. Would this be a deal killer?

  1. Financing- Would this be a challenge to obtain bank financing? – I will be checking with local lenders…but more so on the resale exit.

Thanks in advance for any of your comments, concerns and feedback.

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Before you close you need to work out the zoning item where the city is telling you filling vacant pads isn’t allowed. Your Muni attorney talks to city attorney to work it out.

I would check out what other Parks are charging for lot rent to be sure you can do another bump.


Like previous response, if the zoning would prevent bringing in homes, that would be a deal killer for me. It ties your hands as an operator. A home can be damaged beyond repair. Then you need to replace it. With the zoning issue, you don’t have that choice. You have to either continue to rehab which doesn’t really make sense or pull out the home, which will decrease occupancy forever.

Conventional financing will be difficult because of the size, low occupancy, and potential zoning issue. If you are a local investor, it may be a bit better. Also you will probably have to get hard-money.

Jae Cho

@jhutson thanks for the insight. yes that is what I understand, I still need to confirm with zoning you would think it would be easy with a smaller city however getting a hold of someone appears to be a challenge. I have called around at parks the issue is there’re only a handful of smaller parks with no listed numbers anywhere to be found(unless anyone has any suggestions on how to find/contact them?), I did contact the only one listed which had no spaces available they only rent out POHs ($350-600)so I had to call around to the next city which is larger and found most are over $215-225 range space rent some nicer larger parks. So i think even a small bump $20 is doable. but need to sort out the zoning question first. thank you for the insight.
@jae yes for sure…appreciate the insight. I’ll see what zoning confirms…not sure if getting municipal attorney is needed hopefully not , however if that is the case we will be going back to the seller for sure to get it sorted out on the sellers dime. My thought was a local lender may finance it as a package…I found the lender who current owner used when they acquired it 17 years ago so we’ll see. I see you work with Stewart Winkler…Stewart and I have spoken and met a few times. You guys lend I see?

So I finally got confirmation that the zoning is grandfathered in and homes can be brought in and out so that is solved.
However a few concerns I have:

  1. I ran a test ad this past week both in CL and local paper I have only received a few calls with is concerning(signs may work better in certain markets) of course seller is saying they are getting 6 calls a day.
  2. After getting documentation from seller it was discovered that occupancy is 44% not 69% as originally told by the seller
  3. The seller has limited documentation on financials no real rent roll, tax returns , as husband is ill and the wife indicates husband didnt keep good books so she is starting from scratch. So its hard to verify real numbers and who’s paying not paying.
  4. Appears there are more POH rentals in this market vs TOH ( could be an opportunity or not)

Is this a deal I should pass on? I could go back and negotiate price and terms however my concern is the demand really there, and filling the spaces.

Thanks in advance for your feedback and comments.

If the test ad, and advertising mediums are solid and demand doesn’t meet your needs then walk. Would need a huge reduction to keep me interested with all the issues. Not likely to work.

@jhutson Thanks for the feedback. In total I have received about 6 responses over the past week so not great. its a small market , not great but not bad, and not being able to verify income of the park makes it a bit challenging. Even with a major reduction is price would it still be worth pursuing? So not sure if its worthing pursuing and spending anymore time on it or just dropping it, may be a better fit for someone that is local.

In follow up to my post in terms of a test Ad what is the average response to determine if its deal or no deal. For a small market with a population of 11k is 6 calls or responses in a week or just over a week good or bad? What should be expected ? I realize in a larger market if demand is there you should be getting multiple calls per day.
Thanks in advance for any insight and feedback.

Smaller markets tend to have niche websites, local papers, bandit signs, and other marketing channels that work better. If you try all that and only get 6 calls in a week then you should walk. You should be getting at least 5 per day if you’re priced right for your market and hitting the right mediums.

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Thanks I hadn’t tried bandit signs…only Craigslist and the daily newspaper. If there is anyone that may have an interest in this park let me know I would consider assigning my contract on this…or partner with experienced MHP investor… Thanks Again.